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 in Elliott's office and
Elliott departed leaving the agent alone. The agent studied the books
and records for some time and then returned to the plant office where
the work orders were kept and secured 35 to 40 of them for the year
1950. He listed and checked them against the accounts receivable on the
books and discovered that many orders were not shown on the books. He
then listed all of the orders for 1950, checked them against the books
and found numerous additional unrecorded jobs or work orders. He also
discovered numerous sales invoices which were not shown on the books and
records. In some instances the unrecorded sales invoices corresponded
with the unrecorded work orders, but there were some unrecorded sales
invoices for which there were no work orders and some work orders for
which there were no sales invoices.
Two
weeks later Elliott produced another set of sales invoices for the years
1948, 1949 and 1950, grouped by months, and explained to the agent that
these were the invoices he should be using and that the others were the
wrong invoices. The agent found that the new lot of invoices
corresponded with the books, but they did not account for any of the
unrecorded work orders.
Subsequently
Forbes was joined in the investigation by Acting Special Agent Ray V.
Williams. He was introduced as such to the partners and they were told
that he was there to assist in the investigation. Together the agents
listed all the work orders for the entire period and checked them
against the books and discovered both unrecorded work orders and
unrecorded sale invoices for each year. On one occasion Williams
discovered Elliott putting old correspondence in the wastepaper basket
and upon examination found that it referred to sales for which no work
orders or sales invoices had been found.
During
the month of October, 1951, after compiling the information obtained in
this way, one or the other of the agents spent three or four weeks in
visiting persons who had bought signs from the company so as to
ascertain whether the unreported sales had actually been made. At the
end of the month the two agents conferred with both partners and
presented some of the evidence which they had discovered and told them
that a substantial number of unreported sales had been found and asked
for an explanation. The partners were told that they need not answer the
questions but they were not told that their answers might be used
against them in a criminal prosecution. Some items were discussed but
the partners did not explain the deficiencies in the records above
described. They expressed a desire to cooperate with the agents and
permitted them to search their private offices, but no additional
information was secured.
[Leads Followed by Agent]
After
the conference Williams traveled over 8,000 miles between
October 1, 19
51 and
February 1, 19
52, in visiting 50 towns in North and South Carolina, and in Virginia
and Georgia, and making contact with 160 persons in following up leads
from correspondence sales invoices and the work orders in order to
ascertain whether the sales had been made. In this way additional sales
were found as to which no data had been discovered amongst the papers of
the partnership.
Significant
evidence of faulty accounting was introduced with respect to specific
years. For 1947 the record showed 168 entries of transactions in a
certain book of which a large number were omitted from the partnership
return. For 1948 the partnership return listed as a deductible expense
two items for a heating plant installed in the home of the father of the
partners. In 1949 the partners accepted certain electrical household
appliances in exchange for signs and, except for small sums of cash used
in the transactions, made no record of them on the books of the
business; and in the same year a check for $4985.50 was received in
payment for a sign but at no time was the amount recorded or reported as
a sale. During 1950 the partnership traded signs for automobile
passenger cars but the entries were not completely recorded. In 1950 a
check for $3400 was received for the installation of a sign, but the
check was exchanged for a cashier's check which was delivered to a motor
company for an automobile which was listed in the name of Helen C.
Turner. The sale was not recorded upon the books or reported in the
partnership tax return.
The
defendants objected to the admission of the evidence secured from the
books of the business and moved to suppress it on the ground that their
consent to the examination was fraudulently obtained under the pretext
of a routine investigation for civil purposes when, in fact, a criminal
prosecution was contemplated. It is said that from the beginning Agent
Forbes had a criminal prosecution in mind and by concealing this fact,
the Government obtained the information by a false pretense. Appeal is
made to the prohibition of the Fourth Amendment against unreasonable
searches and seizures and the prohibition of the Fifth Amendment against
compelling a defendant in a criminal case to be a witness against
himself.
[Constitutionality Questioned]
The
contention seems to be that revenue agents who secure the consent of a
taxpayer to an examination of his books with intent to obtain evidence
and use it in a criminal prosecution, are guilty of deceit unless they
divulge their purpose, and that the obtaining of information in such a
manner violates the Fourth Amendment and its introduction in evidence
violates the Fifth Amendment; and even if the examination is begun
solely to ascertain the civil liability of the taxpayer and evidence of
crime is unearthed, the taxpayer must be warned and given an opportunity
to withdraw his consent, or all information subsequently obtained is
inadmissible in a criminal prosecution.
See
Redlich, Searches, Seizures and Self Incrimination, 10 Tax Law
Review 191. (January, 1955).
United States
v. Guerrina, D. C. E. D. Pa., 112 Fed. Supp. 126 [53-1 USTC ¶9369],
126 Fed. Supp. 609 [55-1 USTC ¶9143].
In
our view the facts in the pending case and the applicable rule of law do
not justify the appellants' position. The agents made no investigation
to which the defendants did not consent. The bookkeeper was ordered by
the defendants to show the books and records of the business to the
agent; he told the agent in answer to an inquiry that the contents of
the filing cabinet in the plant office consisted of work orders, and he
then left the agent in possession of the material in the bookkeeper's
office. Certainly the bounds of the defendants' consent were not
exceeded when the agent took the work orders from the filing cabinet in
the other building and examined them. They were in fact the only records
of certain transactions which had been retained, and they were
subsequently examined at great length by both agents in the bookkeeper's
office without any objection on the part of the defendants. They
themselves took the stand in their own behalf and made no complaint that
they had been surprised or deceived by the agent, and one of them
testified that they had never refused to cooperate with the agent with
respect to any of the records in the office of the company but had given
them access to the whole place.
At
no time did the agents bring pressure to bear upon the defendants or
conceal their indentity or practice any deceit. The evidence is silent
as to whether agent Forbes began the investigation as a routine
examination to ascertain the civil liability of the defendants or
intended from the beginning to search for evidence of crime. But even if
the latter assumption be made, there was no violation of the taxpayer's
constitutional rights. The relevant inquiry is always whether the
taxpayer freely gave his consent, and as to that there is no dispute in
this instance.
It
has been expressly held time and again in tax evasion and other criminal
cases that it is not essential to the admissibility of statements
secured by officers of the law from a defendant that he should be first
warned that the information might be used against him in a criminal
case, provided that it was voluntarily and understandingly given.
United States
v. Burdick, 3 Cir., 214 Fed. (2d) 768, 773 [54-2 USTC ¶9475]; Montgomery
v. United States, 5 Cir., 203 Fed. (2d) 887, 892 [53-1 USTC ¶9336];
Lisansky v. United States, 4 Cir., 31 Fed. (2d) 846, 851 [1929
CCH D-9277]; Hanson v.
United States
, 8 Cir., 186 Fed. (2d) 61, 64 [51-1 USTC ¶9118]; Powers v.
United States, 223
U. S.
303; Wilson v. United States, 162
U. S.
613. We are in accord with the comment of the court in United States
v. Wolrich, D. C. S. D. N. Y., 119 Fed. Supp. 538 [54-1 USTC ¶9276],
where a similar situation was presented. The court said: (p. 540)
"On
the issue of fraud, defendant relies heavily on cases in which law
enforcement officials gained entry by masquerading as private citizens.
See Gouled v.
United States
, 255
U. S.
298, 41 S. Ct. 261, 65 L. Ed. 647; Fraternal Order of Eagles v.
United States
, 3 Cir., 57 Fed. (2d) 93;
United States
v. Mitchneck, D. C. M. D. Pa., 2 Fed. Supp. 225. Here, the
revenue agent made no attempt to hide his official identity or the
official purpose of his business. Surely defendant was aware that if a
'routine audit' revealed evidence of criminal liability, the agent would
not ignore it merely because he was primarily concerned with civil
liability. Defendant was apprised of the fact that his books were sought
for investigation by an official of the Internal Revenue Bureau. On that
understanding, he authorized his accountant to make his books available.
I cannot accept defendant's reasoning or that of the court in United
States v. Guerrina, D. C. E. D. Pa., 112 Fed. Supp. 129 [53-1 USTC
¶9369]. A statement that the purpose of an investigation is a 'routine
audit' is not the equivalent of a promise that only civil liability will
be considered regardless of what the examination reveals. Nor would any
accountant or businessman so understand it."
[Cases Properly Consolidated]
There
was no error in consolidating the two cases for trial over the objection
of the defendants. It was stipulated by counsel that the defendants were
equal partners and owners of the business. The evidence as to additional
unrecorded and unreported partnership income applied to both of them,
and the amount was divided equally between them in order to arrive at
their individual tax deficiencies. Questions of consolidation are within
the sound discretion of the court, and in this case it was exercised
wisely. Gaudio v.
United States
, 4 Cir., 179 Fed. (2d) 300; Dowdy v.
United States
, 4 Cir., 46 Fed. (2d) 417, 421; Tincher v.
United States
, 4 Cir., 11 Fed. (2d) 18, 21. One might almost say that it would
have been an abuse of discretion to require separate trials as to the
two defendants since it would have required unnecessary repetition of
substantially the same evidence. See Federal Rules of Criminal
Procedure, 8, 13.
The
defendants raise other questions of evidence. They complain of the
action of the trial judge in admitting evidence that they failed, during
some of the years between 1946 and 1950, to file intangible tax returns
under the law of North Carolina. They objected when the evidence was
offered and the court ruled that it should be received, but was relevant
only on the question of intent. On cross examination it was brought out
that the witness had no knowledge as to whether the defendants were
required to file the returns under the state law. No further attention
was paid to the point during the subsequent days of the trial. The
Government's attorney did not press the matter any further and the
attorneys for the defendants did not move to strike the evidence from
the record or request any special instruction as to its effect, and none
was given. Obviously the incident was insignificant and it cannot be
said that the jury was prejudiced against the defendants by the
knowledge that they did not file certain tax returns under the state
law, when there was nothing to show that the statute required the
returns to be made.
[Other Objections to
Admissibility]
During
the trial the judge admitted in evidence the testimony of Merrill Wyatt,
Group Supervisor in the Intelligence Division in
Greensboro
. He was shown to be a qualified expert in tax matters. He prepared a
computation of the tax liability of the defendants for each of the years
in question, based on the testimony of Government witnesses and
Government exhibits. The computation was offered in the form of
schedules for each of the tax years showing the additional income of the
partnership to be accounted for and the additional taxes due by each
partner. It is contended that the ruling was wrong because the evidence
was offered in such a manner as to lead the jury to conclude that they
were required to accept as true the evidence on which the computation
was based instead of allowing the jury to find the facts for themselves.
The
record does not support the contention. On the contrary the court warned
the jury before the computation was submitted to them that the
calculations were based on evidence that had been previously adduced and
that if the jury did not believe the evidence and did not find that the
income indicated had been realized by the defendants, then the
computations would have no relevancy. Again in the charge to the jury
the court pointed out that the computation was based in part on the
evidence of sales admitted to have been made by the defendants, in part
of the testimony of a number of witnesses from various parts of the
country who testified that they had bought signs from the company, and
in part on the admission by the defendants that if certain
additional witnesses were present they would testify that they had paid
various sums to the defendants for signs which they bought. After
enumerating these three sources of proof the Judge told the jury in
effect that the experts' calculations were admitted on the assumption
that the jury should find that the assumed facts were actually true,
otherwise they would have to dismiss such of the calculations for which
there was no supporting evidence. The defendants contend that the jury
could have been misled by the use of the word "admission" in
referring to the testimony of witnesses not produced in court; but the
jury was [not] told that the facts were admitted to be true but only
that the witnesses if present would so testify. The preparation and
submission to the jury of such summaries as were made in this instance
by the witness Wyatt is well nigh indispensable to the understanding of
a long and complicated set of facts, and the practice has the sanction
of the courts. United States v. Johnson, 319
U. S.
503, 519 [43-1 USTC ¶9470]; Beaty v. United States, 4 Cir., 213
Fed. (2d) 712, 719-721 [54-2 USTC ¶9466];
United States
v. Gaserta, 3 Cir., 199 Fed. (2d) 905, 908.
The
appellants complain that the court erroneously excluded evidence which
would have shown that the Government had collected a part of the taxes
claimed to be due by the defendants. The witness Wyatt was asked on
cross examination whether the Government had not sold all the lands and
all of the personal property of the partners and collected approximately
$50,000 in taxes. On objection of the Government the evidence was
excluded for the reasons stated in the following pronouncement of the
District Judge: "It is not material whether the Government has
succeeded in getting all the taxes or part of it. The question is
whether or not the defendants in filing a return filed a false and
fraudulent return. It is not necessary that the defendant should succeed
in his efforts to defraud the Government out of taxes. It is not
material whether the Government ultimately collects it or not, the
question is whether the defendant in filing his return filed one that he
knew to be false when he did it, and did it with the intent to evade the
payment or attempt to evade the payment of his taxes in that year, and
so if an offense is committed it is committed when that happened, when
he filed his return." This ruling was correct. It is true that
events subsequent to the filing of tax returns charged to be fraudulent
may be relevant if the evidence in regard thereto throws any light upon
the intent with which the returns were filed; Berkovitz v. United
States, 5 Cir., 213 Fed. (2d) 468 [54-1 USTC ¶9425]; United
States v. Matot, 2 Cir., 146 Fed. (2d) 197; Heindel v.
United States
, 6 Cir., 150 Fed. (2d) 493 [45-2 USTC ¶9372]; but in this instance
there is nothing to show that the forced collection of the taxes by the
Government after the discovery of the crime throws any light upon the
intent of the defendants when they filed their returns.
[Jury Contacts]
Finally
it is urged that the District Judge erred in refusing defendants' motion
for a new trial. The motion was based on evidence of certain contacts
between Assistant United States Attorney E. L. Gavin, Jr., who
participated in the prosecution, and Lonnie Buchanan, one of the jurors
in the case. Buchanan had served as a juror during the criminal term of
court in June and was called back in October of the same year as a
member of the panel from which the jury in the pending case was chosen.
Both of the men lived in
Sanford
, which is 58 miles from
Greensboro
where the court was held. Buchanan, an elderly man, had delivered ice to
Gavin's family when Gavin was a child, and Gavin had gone to school with
Buchanan's daughter. During the June Term Gavin gave Buchanan a ride in
his car on one or two occasions in going to or from court. Just before
the Turner trial began Buchanan's daughter-in-law requested Gavin to
take Buchanan to court on the opening day and Gavin did so. During the
ride Buchanan asked what sort of cases were going to be tried and Gavin
replied "income tax and other cases." During the selection of
the jury Buchanan was called to the jury box and asked the judge to
excuse him because he was 72 years of age, had served in June and had a
sick brother. Gavin thereupon in open court joined in the request, but
the judge refused, and Buchanan was sworn as a member of the jury. In
the afternoon of the same day Buchanan asked Gavin to drive him home but
Gavin replied that he was not going home. This conversation was reported
to the court by Gavin who asked the judge to instruct the jury not to
talk to anybody about the case and the judge gave the instruction. Gavin
had come to court prepared to stay in
Greensboro
during the trial and did not go home during the trial except for one
night for a change of clothing. There was no further conversation or
contact between the men during the trial.
It
is urged that a new trial should have been granted because these
friendly contacts between the juror and the prosecutor, unknown to the
defendants' attorneys, were of such a character as to prejudice the
juror in favor of the prosecution and deprive the defendants of a fair
trial by twelve impartial jurors. We do not agree. The incidents
complained of sprang naturally from the casual and friendly relationship
between the two men which had existed for many years. The relationship
between them could have been readily ascertained by the defendants'
attorneys if they had seen fit to question the juror before he was
sworn; and if they remained ignorant of the fact they had only
themselves to blame. Doubtless the prosecuting attorney would have been
wiser and more discreet, if out of abundance of caution he had refrained
from any kindness or manifestation of friendship towards a member of the
jury; * but the
whole matter was carefully gone into at a hearing before the experienced
judge who tried the case, and he came to the conclusion that there was
no evidence of misconduct or impropriety which in any way affected the
decision of the case. The facts were far different in the contrary
decisions on which the defendants rely. See Remmer v. United States,
347
U. S.
227 [54-1 USTC ¶9274]; United States v. Rakes, E. D. Va., 74
Fed. Supp. 645. It would have been a miscarriage of justice to grant a
new trial in the pending case in which the evidence disclosed no
reasonable doubt as to the defendants' guilt.
Affirmed.
*
In Remmer v. United States, 347 U. S. 227, 229 [54-1 USTC ¶9274],
the court said: "In a criminal case, any private communication,
contact, or tampering, directly or indirectly, with a juror during a
trial about the matter pending before the jury is, for obvious reasons,
deemed presumptively prejudicial, if not made in pursuance of known
rules of the court and the instructions and directions of the court made
during the trial, with full knowledge of the parties. The presumption is
not conclusive, but the burden rests heavily upon the Government to
establish, after notice to and hearing of the defendant, that such
contact with the juror was harmless to the defendant. Mattox v.
United States
, 146
U. S.
140, 148-150;
Wheaton
v.
United States
, 133 Fed. (2d) 522, 527."
[53-2
USTC ¶9549]Austin F. McFee, Appellant v.
United States of America
, Appellee.
(CA-9), In the United States Court
of Appeals for the Ninth Circuit., No. 13,482., 206 F2d 872, 08/24/53
Appeal from the United States District Court for the District of Idaho,
Northern Division.
Penalties: Trial: Continuance.--Taxpayer was convicted for wilful
attempts to evade income taxes. On appeal he urged that the trial court
erred in denying him a continuance. Since he was represented by a firm
of certified accountants and by counsel for some months prior to
indictment, no prejudice resulted to him from the denial of a
continuance.
Penalties: Trial: Sufficiency of evidence.--Taxpayer asserted that
the Government failed to establish a firm starting point for its
determination of his net worth and did not establish the exact source of
the unreported income. The Court of Appeals pointed out that the
establishment of his net worth as of the beginning of 1945 was thorough.
The Government had examined his records and books, bank accounts, court
and county records to determine if there were any possible sources of
funds. The proof of the exact amount or precise source of unreported
income is not required.
Privileged communications: Attorney and client relationship.--Two
lawyers who had on different occasions represented taxpayer testified,
under objection, that taxpayer had given them cash with which to
purchase cashier's checks. The Court of Appeals saw no confidential
relationship of an attorney and client in such transactions.
Penalties: Trial: Failure of court to give requested
instructions.--Taxpayer assigned as error the failure of the trial court
to give a requested instruction on circumstantial evidence. The Court of
Appeals found that the instructions given by the court on circumstantial
evidence stated the law with much more clarity than did the proffered
instruction which was rejected.
Penalties: Trial: Comment of court.--Taxpayer assigned as error
certain statements of the trial court. The Court of Appeals felt that,
viewing the instructions of the court as a whole, the jury was clearly
informed that it was free to perform its fact-finding functions.
Penalties: Trial: Admissibility of evidence: Admissions.--Error was
claimed in the admission of the testimony of revenue agents as to
statements made to them by taxpayer. The Court of Appeals found that
independent evidence not only substantially corroborated the admissions
but established the corpus delicti.
Harold
S. Purdy, Coeur d'Alene, Ida., J.F. Emigh, Butte, Mont., Elden
McFarland, Washington, D.C., James P. Keane, Wallace, Ida., for
appellant. H. Brian Holland, Assistant Attorney General, Ellis N. Slack,
Meyer Rothwacks, John Lockley, Special Assistants to the Attorney
General, Washington, D.C., John A. Carver, United States Attorney,
Boise, Ida., Dudley L. Wilson, Special Assistant to United States
Attorney, Spokane, Wash., W.W. Patten, Special Assistant to United
States Attorney, Seattle, Wash., John Lockley, Attorney, Department of
Justice, Washington, D.C., for appellee.
Before:
MATHEWS, HEALY and ORR, Circuit Judges.
ORR,
Circuit Judge:
Appellant
was tried and convicted by a jury on two counts of an indictment for
wilful attempts to defeat and evade income taxes due and owing by him
for the years 1945 and 1946 in violation of §145(b) of the Internal
Revenue Code, 26 U.S.C.A. §145(b). He was sentenced to imprisonment for
one year and six months and a fine of $7,500 on each count, the terms of
imprisonment to run concurrently; the imprisonment on count two to be
suspended and appellant placed on probation for two years commencing
after service of sentence on count one on the condition that appellant
pay the amounts due the government on income tax.
The
judgment is challenged upon numerous grounds and we consider each
contention in the order set forth in appellant's brief. The pertinent
facts are set out in our consideration of each assignment of error.
[Continuance
Denied]
I.
Denial of Continuance. Appellant urges that the trial court erred in
denying him a continuance. The indictment was returned
November 8, 19
51. Appellant was arrested
November 17, 19
51. He was arraigned
April 1, 19
52 and on that date the case was set for trial for
April 22, 19
52. On
April 1, 19
52 appellant asked for a bill of particulars. The bill of particulars
was furnished
April 2, 19
52. Appellant asserts that it was not until then that he and his
attorneys were advised that the Government had adopted the expenditure
method of computing his income and tax. On April 4th he moved for a
continuance and supported his motion with affidavits made by each of his
two attorneys wherein they detailed certain investigations which they
desired to make and to cause to be made in preparation for trial, which
investigations, they averred, could not be accomplished within the time
remaining before trial. "It is elementary that a matter of
continuance rests in the sound discretion of the trial court, and its
action in that respect is not ordinarily reviewable. It would take an
extreme case to make the action of the trial court in such a case a
denial of due process of law." Franklin v. State of
South Carolina
, 218
U.S.
161, 168.
This
is by no means an extreme case. The affidavits filed by counsel in
support of the motion present no facts from which a reasonable inference
could have been drawn that substantial evidence supporting a defense
would have been discovered. The showing, at most, was a request for time
in which to make a search for new evidence. For some months prior to
indictment appellant was represented by a firm of certified public
accountants and by counsel. Surely, if a reasonable probability existed
that a continuance would have enabled appellant to procure evidence not
then known to him, a better showing would be expected in view of the
expert assistance he had at hand and because of their presumed
familiarity with his affairs. We see no prejudice resulting to appellant
from the denial of a continuance. As a matter of fact the trial court
exercised its discretion wisely by furthering an expeditious trial of
the case. Such action is to be encouraged where, as here, the rights of
a defendant are not jeopardized.
[Evidence
Was Substantial]
II.
Sufficiency of the Evidence. In determining appellant's income the
Government used both the expenditure and net worth methods. The two
computations are merely accounting variations of the same basic method,
the expenditure theory being an outgrowth of the net worth method.
U.S.
v.
Caserta
, 3 Cir. 1952, 199 Fed. (2d) 905 [52-2 USTC ¶9540]. Both involve a
determination of the taxpayer's net worth at the beginning and end of a
period in order to foreclose the possibility that the expenditures were
made or the net worth increases were derived from prior accumulated
funds. The underlying theory of the expenditure method is that if
expenditures exceed reported income for the period and net worth has
remained constant or changes otherwise accounted for, an inference may
be drawn that total income was not properly reported. The theory of the
net worth method is that if a taxpayer's net worth at the end of a
particular period is greater than his net worth at the beginning of the
period, and such increment is not attributed to gifts, devises, loans,
or other non-income sources, the conclusion may be drawn that the
increase in net worth represents income to the taxpayer. The net worth
and expenditure computations of the Government both tended to show that
appellant had failed to report taxable income of $79,911.23 in 1945 and
$70,769.76 in 1946.
Appellant
does not deny that his expenditures for the two years in question
greatly exceeded his reported gross incomes. He asserts, however, that
the Government's case must fall because it failed to establish a firm
starting point for its determination of his net worth. He challenges the
accuracy of the prosecution's computations first on the ground that the
Government failed to exclude the hypothesis of funds other than income
from which the substantial expenditures could have been made, and
second, on the ground that certain known assets were omitted from the
net worth statements.
Appellant
contends, and we agree, that in a net worth case the Government must
establish with a reasonable degree of accuracy the taxpayer's net worth
at the beginning and end of the period in question. We think this
requirement was fully and adequately met in this case. There is no
exclusive set of circumstances to foreclose the prior accumulation
hypothesis. How much evidence must be offered by the prosecution before
the trial court can properly submit the case to the jury depends upon
the facts of the particular case. Remmer v.
United States
, 9 Cir.,
May 28, 19
53, 205 Fed. (2d) 277 [53-1 USTC ¶9421]. The Government is not required
to refute all possible speculations as to the sources of funds from
which the expenditures might have been made. Gariepy v.
United States
, 6 Cir. 1951, 189 Fed. (2d) 459 [51-1 USTC ¶9318]. We view the
evidence in the light most favorable to the Government and affirm if the
evidence is sufficient to justify the jury in finding therefrom, beyond
a reasonable doubt, that there has been a wilful attempt to evade taxes.
Gendelman v.
United States
, 9 Cir. 1951, 191 Fed. (2d) 993 [51-2 USTC ¶9474].
In
the instant case the establishment of appellant's net worth as of the
beginning of the year 1945 was thorough and in detail. The revenue
agents began their inquiry with the year 1935 and traced appellant's
financial history through 1946. There was evidence that in 1934 and 1935
appellant moved from a $1.50 a day hotel room to the back room of a
cinderblock building where he cooked his own meals to save expenses,
that he was employed in a meat market at $50 to $60 a week, that he
began the operation of North Idaho Sales Company about 1936 in
partnership with his daughter with a maximum capital investment of
$2,000, that the bank account was not always sufficient to cover a $12 a
week check paid to an employee, that he filed no income tax returns in
Idaho prior to 1936. From these facts the jury was entitled to infer
that appellant was not in the possession of substantial assets as of the
year 1935. The Government produced appellant's income tax returns and
established the amount of income reported for the years 1936 to 1945 to
negative the likelihood of his having accumulated a large surplus in
those years. The agents examined appellant's records and books, bank
accounts, court and county records to determine if there were any other
possible sources of funds. He was given credit for all known borrowings
and such amounts were eliminated from the income computations. The
investigation was as full and complete as the Government could be
reasonably required to make.
This
evidence is substantial. The net worth computation was necessarily an
estimate but, as such, was competent for the consideration of the jury.
The Government's case is not destroyed by argumentative speculation,
unsupported by evidence, that he might have had other substantial assets
not taken into account by the Government. Appellant's voluntary
admissions to the revenue agents that he had received no inheritances,
that he had no other source of income than the known assets, and that
$50,000 was all he had on hand as of
January 1, 19
42, serve only to corroborate the accuracy of the net worth statements.
[Exact
Source of Unreported Income]
Another
argument of appellant in which we find no substance is that there was
fatal variance because the Government did not establish the exact source
of the unreported income. The law is clear that proof of the exact
amount or precise source of unreported income is not required. Jelaza
v.
United States
, 4 Cir. 1950, 179 Fed. (2d) 202 [50-1 USTC ¶9149]; Gariepy v.
United States, 6 Cir. 1951, 189 Fed. (2d) 459 [51-1 USTC ¶9318].
The jury was entitled to infer from the evidence that the unreported
income came from one or all of the sources specified in the bill of
particulars.
Appellant
further attempts to attack the accuracy of the net worth statements by
showing that certain known assets were omitted. There was testimony that
the revenue agents were advised that appellant in 1943 personally had on
hand approximately $114,000 in cash which he spent for liquor and which
was not recorded on his business books. Substantial evidence appearing
in the record justifies the inference that no such asset existed. The
revenue agent testified that he did not give appellant credit for this
item because it represented numerous purchases of whiskey and not a
single transaction. Any whiskey on hand in 1945 was included in the net
worth statement as inventory. He further testified that appellant
informed him that this item would be accounted for on the Foresters Club
books and that it related to whiskey inventory turnover. The
contradictory and highly questionable testimony of R.E. McDonnell was
the only affirmative evidence concerning this transaction. At one point
during his testimony the trial court found it necessary to caution the
witness against testifying falsely. The jury no doubt disbelieved
McDonnell.
Two
other items allegedly improperly omitted need no extended treatment
since, even if we were to assume that appellant's contention is correct,
the total amount involved could not affect the result. The challenged
items amount to approximately $23,000 whereas the Government
computations disclose a failure to report approximately $80,000 in 1945
and $70,000 in 1946. The Government is not required to prove the
defendant's guilt to a mathematical certainty. Schuermann v.
United States
, 8 Cir. 1949, 174 Fed. (2d) 397 [49-1 USTC ¶9281].
Appellant
also claims that the two net worth statements were highly prejudicial to
him because they both contain entries showing that he paid no income tax
in 1945 or 1946 when in fact he did pay taxes for these two years. It is
true that appellant overpaid his income taxes in 1944 and received a
credit of $25,879.94 which was applied to his 1945 and 1946 taxes. The
record does not disclose the year in which he received the income tax
credit. Appellant concedes, however, that the treatment given this item
by Government accounts had no affect [sic] whatever on the net
worth computation. His complaint is that it was prejudicial to send to
the jury statements which showed that he had paid no federal income tax
during the two years in issue. We find no merit in this contention. It
is clear that the jury had before it abundant evidence that appellant
had paid taxes in these years. Appellant himself introduced a letter
from the Treasury Department crediting him with the overpayment of his
taxes. His income tax returns were in evidence and there was testimony
by a revenue agent that appellant had applied the tax refund to his 1945
and 1946 taxes.
III.
Confidential Communications. Two lawyers, Messrs. Keane and Stern, who
had on different occasions represented appellant, were called as
witnesses by the Government and requested to testify. They made
objection on the ground that the matters concerning which they were
questioned were privileged because at that time the relationship of
attorney and client existed between them and appellant. Their objections
were overruled and answers were then given. Lawyer Keane testified to
the effect that he had obtained $12,500 in currency from appellant on
January 28, 19
46, with instructions to purchase a cashier's check; that he had his
secretary do so, and that another $3,000 check was handled the same way.
On
March 21, 19
46, he received another $9,000, mostly in currency, of which he paid
$7,500 for a cashier's check and gave $1,500 to Stern. He also testified
about a $5,500 note receivable and a $4,700 check payable to McDonald,
for which appellant advanced funds.
Lawyer
Stern testified to the effect that he deposited $12,500 in the Dakota
National Bank at
Fargo
,
North Dakota
, which was used partially to make payments to the District Court of the
United States
. He testified that he cashed a $3,000 check and gave the funds to
appellant.
The
Government's purpose in eliciting the evidence from the lawyers was to
show as a part of the expenditures that the sum of $16,500 was used by
appellant in payment of fines in 1946.
We
see no confidential relationship between attorney and client in the
above transaction. The attorneys acted in the capacity of a transmitter,
not as lawyers giving legal advice. The lawyers stand in the same
relation as would a banker had one been commissioned by appellant to
carry out what appears to be no more than clerical and messenger
service. Pollock v.
United States
, 5 Cir. 1953, 202 Fed. (2d) 281 [53-1 USTC ¶9229]; cf. United
States v. De Vasto, 2 Cir. 1931, 52 Fed. (2d) 26.
[Requested
Instructions Not Given]
IV.
Failure of Court to give requested instructions on circumstantial
evidence. Appellant assigns as error the failure of the Court to give a
requested instruction on circumstantial evidence.
Appellant
makes a statement on page 21 of his brief that he excepted to the
instructions given by the Court on circumstantial evidence. After
setting out the instructions given by the Court it is stated:
"Counsel
for defendant excepted to the above instructions as follows:
"Mr.
Emigh. We would like an exception to the failure of the Court to give
the requested instruction that not only must the evidence prove guilt
but that it must prove the hypothesis of guilt to the exclusion of all
other hypothesis.
"The
Court. You may have your exception."
It
is apparent that the exception was directed to a requested instruction
not given by the Court and not to the instructions given. The
instructions given by the Court on circumstantial evidence, to which no
exception was taken, states the law with much more clarity and force
than does the alleged proffered instruction which the Court rejected.
The jury was adequately instructed on this point.
V.
Comment of the Court. During the course of its instructions to the jury
the Court stated:
"You
are instructed that if you find substantial evidence outside of the
defendant's own statements consisting of increase of net worth during
the taxable years or any absence of personal records or books of account
or the failure of books and records to show fully its transactions or
those of the defendant then this body of testimony derives support from
the defendant's failure to offset or explain the discrepancy through
whatever means he might do so.
"I
don't want to comment on the evidence but there is one outstanding
matter that you are left in the dark about, I don't intend to make any
inference about it, as the evidence here is solely for you. But where
are the tickets that should show the receipts and division of the money
taken from the slot machines for the years 1945 and 1946. There was only
one of these books of tickets introduced in evidence by the defense.
None of the witnesses, bookkeeper, manager or other witnesses for the
defense produced these tickets and all said they had no knowledge of
these tickets. The tickets were traced to the possession of defendant
McFee. It seems to the Court that if the tickets balanced with the bank
account that it would have been an easy matter for the defense to
produce the tickets if they have not been destroyed. Why were they not
produced to show the receipts of the slot machines for these
years?"
Appellant
objected to the statements of the Court concerning the
"tickets" and has assigned it as error.
The
Court further charged the jury as follows:
"Ladies
and Gentlemen of the Jury; when I instructed you I made some comment
concerning the failure of the defendant to produce these sales slips or
tickets, check on the slot machines, or receipts from the slot machines.
You understand that you are not to draw any inference from the Court's
remarks, these are questions of fact for the jury, and you are not to be
influenced by any remarks by the Court as to what the Court thinks about
the testimony."
And
the Court gave the further cautionary instruction:
"If
the Court has inferred, or if you should have gathered during the trial
of the case that the Court has some opinion as to the facts in this case
you will disregard that entirely. The matter of the guilt or innocence
of the defendant as based on the facts presented to you here is a matter
for your determination and yours alone and the Court has not intended to
infer at any time that he had any feeling on the matter."
Other
instructions were given where the function of the jury to pass upon the
facts of the case was stressed.
Viewing
the instructions of the Court as a whole, the statements complained of
were not beyond the bounds of judicial propriety.
United States
v. Aaron, 2 Cir. 1951, 190 Fed. (2d) 144, cert. denied, sub
nomine Freidus v. United States, 342
U.S.
827; Todorow v. United States, 9 Cir. 1949, 173 Fed. (2d) 439,
cert. denied, 337 U.S. 925; Simon v. United States, 4 Cir. 1941,
123 Fed. (2d) 80, cert. denied 314
U.S.
694. It is obvious that the jury was clearly informed that it was left
free to perform its fact-finding functions.
[Admissions
to Revenue Agents]
VI.
Admissibility of evidence of admissions. Error is claimed in the
admission of the testimony of agents of the Bureau of Internal Revenue
as to statements made to them by appellant. This testimony, asserts
appellant, was inadmissible because there is in the record no
substantial independent proof of the corpus delicti. A reading of
the record convinces us that not only does the independent evidence
substantially corroborate the admissions, (which in this circuit is
sufficient, Davena v. United States, 9 Cir. 1952, 198 Fed. (2d)
230 [52-2 USTC ¶9392]) but, contrary to appellant's contention, goes
further and establishes the corpus delicti by competent
independent evidence.
Judgment
affirmed.
[61-1 USTC
¶9327]Charles A. Watkins, d/b/a C. A. Watkins Company, Defendant,
Appellant v. United States of America, Plaintiff, Appellee
(CA-1), U. S. Court of Appeals,
1st Circuit, No. 5671, 287 F2d 932, 3/28/61, Rev'g and rem'g unreported
District Court decision
[1954 Code Sec. 7201 and 1939 Code Sec. 145(b)]
Criminal procedure: Wilful evasion: Evidence: Instructions.--Prejudicial
error was found in the trial court proceedings as follows: (1) the
District Court was unduly restrictive in ruling as immaterial evidence
of the defendant-taxpayer as to the extent of his business with a
particular customer and the extent of his business with his supplier
where the offer of evidence tended to lessen the probability that
defendant-taxpayer intentionally omitted income or knowingly used
incorrect memoranda to prepare his returns; (2) the admission into
evidence of a summary of travel expenses was prejudicial; and (3) the
District Court misstated the law, regarding prepayments for goods to be
delivered in the future, in ruling upon the admission of evidence and in
its charge.
Robert
A. Raulerson,
Manchester
, N. H. (McLane, Carleton, Graf, Greene & Brown,
Manchester
, N. H., on brief), for defendant-appellant. Alexander J. Kalinski,
Assistant United States Attorney, Concord, N. H. (Maurice P. Bois,
United States Attorney, Manchester, N. H., on brief), for
plaintiff-appellee.
Before
HARTIGAN and ALDRICH, Circuit Judges.
Opinion of the Court
HARTIGAN,
Circuit Judge:
Defendant-appellant,
Charles A. Watkins, was found guilty on three counts of an indictment
charging him with wilfully and knowingly attempting to evade and defeat
a large part of the income tax due and owing by him and his wife to the
United States of America by filing false and fraudulent joint returns. 1 The district
court entered judgment on
January 5, 19
60 and imposed a fine of $7,000 on Count I, a fine of $6,000 plus costs
on Count II and a term of imprisonment of three months on Count III.
Defendant
is an independent distributor of industrial rubber goods. During part of
the three year period he maintained an inventory of his own but by the
end of 1954 he had completely disposed of it. In general, he would
obtain an order for goods from a customer and, in turn, order them from
his supplier to be shipped directly to defendant's customer. After
receipt of an invoice from his supplier, defendant would bill his
customer. The customer generally would deduct a cash discount, if
applicable, and also freight, and remit the balance to the defendant.
Defendant testified that he was not always able to pair off the receipts
with the bills, since one receipt might cover a number of bills. He also
testified that in keeping his records he would ordinarily record a
receipt of payment from a customer in three places, if he followed his
system, i.e., (1) in the ledger of the particular customer's account,
(2) on his bank deposit slip and (3) in a memorandum list of sales
receipts. The total receipts recorded on his income tax returns
coincided approximately with the total of the checks in the memorandum
list for each year, however, there were twenty alleged omissions from
this memorandum list, which was used by defendant in making out the
returns. These checks were all entered somewhere in his records, but did
not appear in the memorandum list. Defendant conceded that eighteen of
these items had been omitted from the returns but contended their
omission was not wilful.
Defendant
contends that the district court erred prejudicially, inter alia,
(1) by restricting him in the scope of his presentation of evidence
tending to show lack of willfullness, (2) by failing to strike certain
schedules and summaries which were inaccurate, misleading and
prejudicial, and (3) by restricting the defense in regard to evidence
that a prepaid item was not taxable income and erroneously charging the
jury in regard to this item.
After
examining the record in regard to the first contention, i.e., that the
defendant was prejudicially restricted in his presentation of evidence
tending to show that the omission of the sales receipts from his income
tax returns was not wilful, we believe that the district court was
unduly restrictive. The trial judge allowed the government to put in
evidence (1) of unreported receipts from prior years, (2) of double
deductions, and overstated deductions taken by the defendant on his
returns both for the years within the indictment and for prior years;
(3) of computations which in a government expert's opinion must have
been made by defendant to make the book entries he did in regard to
certain unreported items; and (4) of stock purchases and other large
expenditures made when defendant's income tax returns indicated limited
amounts of net income and limited amounts of cash available for such
expenditures. The district court ruled as immaterial defendant's
evidence of (1) the extent of defendant's business with Harold Haines,
from whom had come about six of the omitted sales receipts; (2) the
testimony of George P. Fleming concerning defendant's manner, method and
extent of business with Quaker Rubber Corp., defendant's principal
supplier.
We
believe that these offers of evidence were relevant to defendant's
contentions that his omission of sales receipts was not wilful. See 1
Wigmore, §§ 34-36 (3d ed. 1940). Each of these offers tended to lessen
the probability that defendant intentionally omitted these receipts from
his income tax returns, or knowingly used an incomplete memorandum list
in the preparation of his returns and also tended to strengthen the
probability that defendant, allegedly an imprecise bookkeeper, had
unintentionally omitted these sales receipts from his returns.
Particularly in view of the wide scope given the government we believe
that defendant was prejudiced in the exclusions of these items of
evidence.
Defendant
also contends that the district court erred by allowing the admission
into evidence of a summary (Ex. 49) comparing the amounts listed by
defendant in his tax returns as deductible travel expenses with the
amounts recorded by defendant in a memorandum book. The testimony of
defendant was that the memo book was a record of his cash payments in
regard to travel expenses. He testified that there were also some checks
which related to the amounts claimed in the returns and which were not
included in the memorandum book. The special agent, a witness for the
government, testified that he had not gone through the checks which
might have been taken on the returns under traveling, etc. because the
total amount of such checks was not sufficient. We believe that, in view
of this testimony, the summary which listed the various expense items
shown in the returns, totalled the figures in the notebook and labelled
the difference "overstated" was a prejudicial exhibit and
should have been stricken. There may have been a gap between the amount
able to be supstantiated by either memoranda of cash expenditures or
checks but a summary exhibit which misleadingly magnifies that gap is
certainly prejudicial. 2
Defendant
also claims error in the admission of (1) a summary of defendant's
income data over a six year span as reflected by his income tax returns,
and (2) a summary of "total cash available per returns" for
the same six year period. The picture as portrayed by either of these
summaries compared with the evidence of substantial expenditures during
that same period is relevant as tending to show that the defendant was
put on notice that there was a discrepancy, and that he should have made
investigation of the figures used in making his returns. Of course,
there might have been other explanations for not having noticed the
discrepancy, e.g., that the various expenditures originated from funds
already available to defendant. This does not, however, make the
exhibits irrelevant. See Wigmore §32 (3d ed. 1940). 3
In
regard to the third contention of defendant, the evidence and offer of
proof indicate that Harold Haines, near the end of 1952, knew that he
would require certain belting and potato cleaner strips and in order to
guarantee delivery at the existing price placed an order with defendant
for certain goods and prepaid the sales price. Haines' check involved in
defendant's last claim of error was received by defendant in early
January 1953. Defendant contends that the exclusion of evidence that the
prepaid transaction with Harold Haines had never been completed, and the
court's charge that receipts of the money without restriction by
defendant made the amount taxable income constituted prejudicial error.
We shall examine first the law regarding prepayment for goods to be
acquired and delivered in the future. Defendant has cited Veenstra
& DeHaan Coal Co. [CCH Dec. 16,715], 11 T. C. 964 (1948) and Woodlawn
Park Cemetery Co. [CCH Dec. 18,281], 16 T. C. 1067 (1951) to support
his contention that gross receipts are not equivalent to gross income
and that in the case of prepayments for goods to be obtained and
delivered in the future there is no taxable income until there is a
completed sale. These two cases involve accrualmethod taxpayers.
However, that distinction does not seem to us to be material. See 2
Mertens, Federal Income Taxation, §12.125 (1955). As in the Veenstra
and
Woodlawn
Park
cases, defendant at the time of the receipt of Haines' prepayment did
not know the cost of the goods which were to be delivered as part of the
order. If there was never any goods delivered as part of the order, and
consequently never any possibility of setting a cost of goods sold,
there could be no gain constituting income subject to taxation. In
addition, in the instant case there was evidence that Haines customarily
cancelled orders when his unpredictable season ended. This is further
evidence of the contingent nature of the transaction between defendant
and Haines. The government has cited to us no cases which overcome the
persuasive force of the Veenstra and Woodlawn Park cases.
Consequently, we believe the district court misstated the law in regard
to this transaction in its ruling and charge.
It
should be noted, however, that the defendant in his request for
instructions regarding the Haines transaction asked for too much. The
record indicates that defendant's offer of proof was that at least part
of the Haines order involving prepayment was filled by defendant. We
think that the reasoning of the Veenstra and Woodlawn Park
cases requires that the amount of gain in regard to the completed sale
of that portion of the order be reported as income in the year that the
sale of the items is completed. Therefore, the rejection of defendant's
request for instructions on this matter was not prejudicial error.
The
district court excluded testimony that the order was never completed.
Since defendant testified that he did not learn about the asserted
incompleteness until preparing for trial, his omission of this item from
his return for 1953 could not be due to his belief that it was not yet
income. Therefore, this theory of the transaction has no bearing on
defendant's intent at the time of filing his return for 1953.
According
to defendant's offer of proof only $2500 of the order was not filled.
Proof that a certain part of the asserted deficiency was not due,
contrary to defendant's impression, would not defeat the count for 1953
provided that there still was a substantial understatement of income in
the return for that year and such understatement was made wilfully.
According to defendant's offer of proof there was still a substantial
amount of unreported income from the portion of the Haines order that
was completed. Therefore, the offer of proof laid an insufficient
foundation for the only other basis for the relevancy of any testimony
in regard to the incompleteness of the prepaid order. Consequently the
district court's exclusion of this testimony was not error. See Holt
v. U. S. [59-2 USTC ¶9771], 272 F. 2d 272 (9 Cir. 1959).
Defendant
also maintains that the district court made improper and prejudicial
comments during the course of the trial. We have reviewed the record in
this regard and believe that many of these instances stemmed from
remarks and actions of defendant's counsel. In several instances the
court corrected its comments. We do not believe that the district court
committed error by its remarks during the trial. 4 We find no
merit in defendant's other arguments.
Judgment
will be entered vacating the judgment of the district court and
remanding the case for a new trial.
1
Counts I, II and III alleged wilful evasion of taxes owing for the
calendar years 1953, 1954 and 1955 respectively. The statutes alleged to
be violated were I. R. C. 1939 §145(b), 26
U. S.
C. §145(b) (1952) as to Count I, and I. R. C. 1954 §7201, 26
U. S.
C. §7201 (1958) as to Counts II and III.
2
The district judge did not permit the defendant to introduce a schedule
(Ex. S-4) summarizing the calculations made by an accountant testifying
for defendant of expenses incurred in traveling during periods for which
no data was kept, although the accountant's testimony was admitted. The
exclusion of this schedule accentuates the prejudicial effect of
admitting Exhibit 49, which emphasized the differences between the memo
books and returns as "overstatements."
3
It might be better in the circumstances of such use of each summary to
have a cautionary instruction on the proper limits of the summary's
relevancy. But the record does not indicate that such a cautionary
instruction was requested.
4
The defendant argues particularly that the district court erred by
stating on several occasions that the only issue was whether defendant
received money that he did not report. The court's charge to the jury
correctly emphasized defendant's theory that although the checks were
unreported, the omission was not wilful. The court's comments earlier in
the trial were generally related to the Haines prepaid transaction,
although they might conceivably have confused the issues in the jurors'
minds. We have considered previously the court's statements of law in
regard to this transaction. In any case, the matter is not likely to
arise at a new trial.
[53-1
USTC ¶9421]Elmer F. Remmer, Appellant v.
United States of America
, Appellee.
(CA-9), In the
United States
Court of Appeals for the Ninth Circuit., No. 13,281., 205 F2d 277,
05/28/53
Appeal from the United States District Court for the District of Nevada.
Tax evasion trial: Refusal of bill of particulars.--It was proper to
deny a bill of particulars where the offense was stated in the
indictment, and to deny particulars as to the method by which the
Government computed net income, where application of the networth theory
was made known in the course of argument.
Tax evasion trial: Accessibility of records.--Motions for production
of records in the possession of the Government, and acquired voluntarily
from third parties, were properly denied. Several of taxpayer's
accountants had surveyed them, and one accountant was allowed to take
all records necessary for the computation of taxpayer's tax liability,
so that taxpayer was able to prepare an adequate defense. Also, an order
for taxpayer's counsel to return records to the Government was not
invalid, even though they had been obtained by the Government from third
parties, who in turn had obtained them illegally.
Tax evasion trial: Sufficiency of evidence.--Proof of the exact
amount of unreported income is not required, and a willful intent to
evade income taxes can be inferred from failure to report a substantial
amount of income, failure to keep adequate books to reflect income, and
concealment of property. There was substantial evidence to support the
Government's nonrecognition of certain partnerships, and there was no
error in the inclusion of certain IOU's as cash, or in the submission to
the jury of a question of fact as to the significance of certain journal
entries.
Tax evasion trial: Admissibility of evidence.--Testimony of one of
the witnesses could not have been prejudicial, since items of income
mentioned in testimony were not included in the Government's final
computation of taxpayer's net worth.
Tax evasion trial: Instructions to jury.--Taxpayer was not entitled
to an instruction as to a possible inference to be drawn from the
Government's failure to introduce in evidence all of taxpayer's business
records in its possession, since the records were originally prepared by
taxpayer's business associates, were accessible to taxpayer prior to
trial, and were at least surveyed by his accountants subsequent to the
commencement of the Government's investigation of taxpayer's income tax
liability.
Gillen
& Golden, San Francisco, Calif., Lohse & Fry, Reno, Nevada, and
Spurgeon Avakian, Oakland, Calif., for appellant. Charles S. Lyon,
Assistant Attorney General, and Ellis N. Slack, Meyer Rothwacks, Joseph
F. Goetten, Joseph A. Sommer, and Alonzo W. Watson, Jr., Special
Assistants to Attorney General, all of Washington, D.C., and Miles N.
Pike, United States Attorney, Reno, Nevada, for appellee.
Before
MATHEWS, STEPHENS and ORR, Circuit Judges.
ORR,
Circuit Judge:
Appellant
stands convicted on four counts of an indictment charging wilful
attempts to defeat and evade taxes due and owing from him and his wife
for the years 1944 and 1945 in violation of §145(b) of the Internal
Revenue Code, 26 U.S.C.A. §145(b). 1 He was
sentenced to imprisonment for five years and a fine of $5,000 on each of
the four counts, the sentences of imprisonment to run concurrently and
the fines to be cumulative. The judgment is challenged upon numerous
grounds.
I.
Bill of Particulars.
Appellant
first contends that the trial court erred in denying his motion for a
bill of particulars made pursuant to the provisions of Rule 7(f),
Federal Rules of Criminal Procedure. 2 Particular
stress is placed upon the fact that the indictment did not inform him as
to the source or sources of his alleged net income, the item or items
making up his alleged net income, and the method or methods by which the
Government computed his alleged net income. An application for a bill of
particulars is one addressed to the sound discretion of the court. Our
inquiry: Was that discretion abused? Wong Tai v.
United States
, 273
U.S.
77 (1927); Himmelfarb v.
United States
, 175 Fed. (2d) 924 (9th Cir. 1949) [49-1 USTC ¶9313], cert.
denied, 338 U.S. 860; Maxfield v. United States, 152 Fed. (2d)
593 (9th Cir. 1945) [46-1 USTC ¶9115], cert. denied, 327
U.S.
794. A bill of particulars should be granted where it is thought
necessary (1) to protect the defendant against a second prosecution for
the same offense, or (2) to enable the defendant to adequately prepare
his defense and avoid surprise at the trial. In the instant case the
indictment charged that appellant filed tax returns disclosing a certain
net income and tax due, whereas, in fact the net income and tax due were
of a specified greater amount. It is apparent that the offense charged
is sufficiently defined to protect appellant from double jeopardy. We
deem it significant that appellant has not contended that he was
subjected to surprise during the trial by the nature of the Government's
case and thus unprepared to meet the charges against him. See Himmelfarb
v.
United States
, supra; Maxfield v.
United States
, supra. The situation is quite different from that in Singer v.
United States, 58 Fed. (2d) 74 (3d Cir. 1932) [1932 CCH ¶9188],
upon which appellant relies, since there emphasis was placed upon the
frequent interruptions of the trial that were necessary so that the
prosecution could give the defendant information which would have been
contained in a requested bill of particulars. Thus, the defendant in
that case was in fact unable adequately to prepare his defense because
of the failure to grant the bill. Moreover, the indictment in the Singer
case failed to distinguish certain partnership gross income from
partnership net income, an item upon which the defendant should have
been advised and which could have been ascertained only from a bill of
particulars. No such prejudice to appellant is evident in the instant
case. The offense charged was specifically stated in the indictment.
Appellant was in a position to know whether the facts alleged were true.
The most to which appellant was entitled prior to trial was disclosure
of the theory of the Government's case.
United States
v.
Caserta
, 199 Fed. (2d) 905 (3d Cir. 1952) [52-2 USTC ¶9540]. That the
Government was proceeding upon a net worth theory was made known to
appellant during the course of argument on the motion for a bill of
particulars. 3 The District
Court in the exercise of its discretion determined that granting the
requested bill of particulars would merely apprise appellant of
information in the hands of the prosecution to which he was not
entitled. Under the circumstances, no abuse of discretion appears. A
bill of particulars has been denied in prosecutions under similar tax
evasion indictments. See United States v. Rainey, 10 F.R.D. 431
(W.D. Mo. 1950); United States v. Mangiaracina, 10 F.R.D. 415
(W.D. Mo. 1950) [50-2 USTC ¶9467]; but see United States v. Kelly,
10 F.R.D. 191 (W.D. Mo. 1950).
II.
Accessibility of Records.
Appellant
asserts that the trial court erred in denying the defense access to
certain books, papers and documents in the possession of the Government.
The following facts are pertinent to consideration of this contention.
Long
prior to the filing of the criminal indictment in April of 1951,
appellant knew that the Government was investigating his income tax
liability. The Bureau of Internal Revenue issued 90-day letters in 1949
and prior to February of 1950 a federal income tax lien in excess of
$800,000 was placed against his property. Numerous conferences were had
subsequent to
January 11, 19
50, with various attorneys and accountants representing appellant in tax
matters. Power of attorney was executed by appellant to counsel of
record in the present litigation as early as
March 10, 19
50, for the purpose of representing appellant in tax conferences with
the Government. Other attorneys and accountants have represented
appellant with the Treasury Department since early in 1949, powers of
attorney filed with that department disclose.
During
the course of its investigation, the Government acquired voluntarily
from third parties certain books, papers and documents pertaining to
businesses in which it was alleged that appellant had an interest. 4 Being
advised, in the course of conferences, that an audit of appellant's
affairs was being conducted, the Government gave appellant's accountants
complete access to the aforementioned records in its possession. An
affidavit executed by one of these accountants stated that the material
consisted of a "mass of original documents" and that
"this material filled a packing box of approximately fifty cubic
feet in volume plus several other smaller cartons." Although the
accountants surveyed the material at this time, spring of 1950, no
complete analysis of the records is said to have taken place since
appellant did not make sufficient funds available for the task. At
another time prior to the filing of the indictment in this case,
accountant Lawrence Semenza sought permission to examine these records
in connection with work he was doing for appellant in computing his
civil tax liability subsequent to issue of the 90-day letters. Semenza
was not only allowed to examine the business records in the possession
of the Government, but was allowed to select any records he desired for
use in his own office.
After
the filing of the indictment, no request was made by appellant's counsel
for examination of the records not previously selected by Semenza until
October 22, 19
51, more than six months after the filing of the indictment. The
Government agreed to allow inspection of these records only on the
compliance with certain conditions: a sufficient showing of appellant's
interest and consent of the third parties who had originally given the
records to the Government.
Appellant
first sought a court order on
November 14, 19
51, when a motion was made to inspect and take copies pursuant to the
provisions of Rule 16, Federal Rules of Criminal Procedure. 5 In
conjunction with this motion, appellant also sought a continuance of his
trial until
April 1, 19
52, to enable sufficient time for examination of the requested records.
In this regard it should be noted that trial was set for
November 28, 19
51. The motions to inspect and take copies and for a continuance were
denied by the trial court after a hearing.
The
District Court properly exercised its discretion in denying these
motions. As has been observed, at no time prior to the filing of the
indictment was the freedom of appellant to examine the records in the
possession of the Government in any way limited. At least three
accountants representing appellant did in fact survey the material in
question and one accountant was allowed to take all records he thought
necessary for the computation of appellant's tax liability. 6 Although it
is true that accounting analysis of these records was at that time only
for the purpose of settling appellant's civil tax liability, based on
net income alleged by the Government in its 90-day letters to be
$136,718.94 for 1944 and $265,661.78 for 1945, analysis of the materials
for that purpose would of necessity cover the same ground and consider
the same sources of income as would analysis for the purpose of the
present criminal proceedings where the Government alleges lesser sums as
income: $67,469.21 for 1944 and $75,865.19 for 1945. The opportunity
afforded appellant to examine the records in question was sufficient to
enable him to prepare an adequate defense. Furthermore, there is no
adequate explanation as to why appellant waited more than six months
after filing of the indictment to request permission of the Government
to examine the records and first made his motion under Rule 16 two weeks
before the trial was due to commence. The affidavits supporting the
motion to produce and take copies conceded that accounting analysis of
the records would probably take two or three months. One of appellant's
counsel averred in his supporting affidavit that he first learned in
October of 1951 that the Government had possession of various books and
records of some of the business in which appellant had an interest. 7 But the
facts to which we have already referred show that other representatives
of appellant knew of the existence of the records and, at the very
least, had surveyed the material many months earlier. The motion to
produce and take copies therefore was not timely. To refuse to continue
the trial until April 1, 1952, as requested, was not an abuse of the
court's discretion in view of appellant's tardiness in bringing his
motion.
Subsequent
to denial of his motion to inspect and take copies under Rule 16,
appellant on
November 23, 19
51 filed a motion for production and inspection under the provisions of
Rule 17(c), Federal Rules of Criminal Procedure. 8 A subpoena
duces tecum was served on Government counsel, which they thereupon
moved to quash. After a hearing on the day before the trial was to
commence, the trial court granted the Government's motion and denied
appellant's motion. Because of the circumstances already discussed, the
court did not err in determining that compliance with the subpoena would
be unreasonable and oppressive.
The
case of Bowman Dairy Co. v. United States, 341 U.S. 214 (1951),
is not authority for the proposition that the trial court's denial of
the motion under Rule 17(c) was an abuse of discretion, as appellant has
argued. The Supreme Court in that case held that the trial court had the
power to order the Government to produce certain documents. It did not
hold that a refusal to grant the motion to produce would have been an
abuse of discretion.
We
think it important to stress, in considering whether denial of
appellant's motions should be upheld, that the purpose of motions of
this type is to expedite the proceedings and enable a defendant
adequately to prepare his defense. No specific showing has been amde by
appellant as to how the denial of these sweeping motions calling
generally for production of all records in the possession of the
Government pertaining to businesses in which it was alleged appellant
had an interest prejudiced the defense during the course of the trial.
The court stated that appellant's counsel would be given ample
opportunity during the trial to examine any document offered by the
Government. Only once during the trial appellant sought the production
of particular papers, certain daily poker sheets from the 186 Club, and
the request was granted.
We
have referred to certain books, papers and documents given voluntarily
by third parties to the Government, which were selected by appellant's
accountant Semenza prior to the indictment and taken by him to his own
office for use in computing appellant's tax liability. These records
were given to Semenza upon the condition that he return them to the
Bureau of Internal Revenue. Semenza later gave the records to Friedman,
another accountant employed by appellant, who in turn gave the records
to appellant's counsel. When subpoenaed before the grand jury, and later
during the trial, Semenza said he was unable to produce the records
because appellant's counsel would not return them to him. The District
Court then ordered appellant's counsel to deliver these records to the
clerk of the court, the records to be available to both Government and
defense counsel during the trial. Appellant thereupon made a motion
under Rule 41(e), Federal Rules of Criminal Procedure, 9 for return
of these records and suppression of their use as evidence. The motion
was denied.
Appellant
contends that the trial court's order violated the Fourth and Fifth
Amendments to the Constitution of the
United States
. We do not agree. The records given to Semenza were obtained by the
Government from third parties rather than from appellant. Use of such
records by the prosecution would not violate appellant's constitutional
rights, even were it true that the third parties originally obtained the
records from appellant illegally. 10 See Lustig
v.
United States
, 338
U.S.
74, 78-79 (1949); Feldman v.
United States
, 322
U.S.
487, 492 (1944); Symons v.
United States
, 178 Fed. (2d) 615 (9th Cir. 1949). Since the Government's
possession was such as properly to entitle it to use of the records as
evidence, the condition that the records be returned was lawfully
imposed when Semenza's request to select certain records for accounting
analysis was granted. Such a promise to return the records was
enforceable. Cf. Greenbaum v.
United States
, 280 Fed. 474, 478 (6th Cir. 1922). Appellant's counsel took the
records subject to the imposed condition and therefore could not retain
them by asserting so-called constitutional rights of appellant. As the
Supreme Court said in Hale v. Henkel, 201 U.S. 43 (1906) at
69-70: "The right of a person under the Fifth Amendment to refuse
to incriminate himself is purely a personal privilege of the witness. It
was never intended to permit him to plead the fact that some third
person might be incriminated by his testimony, even though he were
the agent of such person." (Italics supplied) Nor was appellant
in a position to assert constitutional rights, because appellant never
acquired personal possession of the records after they were given by the
Government to Semenza. "A party is privileged from producing the
evidence but not from its production." Johnson v.
United States
, 228
U.S.
457, 458 (1913).
The
case of People v. Minkowitz, 220 N.Y. 399, 115 N.E. 987 (1917),
referred to for the first time by appellant during oral argument, is
distinguishable. That case involved papers originally in the possession
of the defendant which had been given to his attorney in the course of
an attorney-client relationship. The court held that under those
circumstances the possession of the attorney was the possession of the
defendant, and the attorney therefore could not be compelled to produce
the papers. In the present case, however, the records were not acquired
by appellant's counsel from appellant in the course of an
attorney-client relationship, but were instead received from the
Government subject to the condition that they be returned.
III.
Sufficiency of the Evidence.
The
Government's case is based upon the net worth method, the underlying
theory of which is that where a person's net worth at the end of a
particular year is greater than his net worth at the beginning of that
year, and such increment is not attributable to gifts, devises, loans,
or other non-income sources, an inference may be drawn that the increase
in net worth represents income to the taxpayer. The net worth
computations of the Government tended to show that appellant had failed
to report taxable income of $31,747.91 in 1944 and $11,747.04 in 1945.
No attempt was made by the Government in this case to increase this sum
by the amount of appellant's non-deductible expenses during the years in
question. The Government not only relied upon numerous documents and the
testimony of more than fifty witnesses to establish the increment in
appellant's net worth during the years 1944 and 1945, but also
extensively investigated possible non-income sources of net worth in
order to exclude their effect. The question of the sufficiency was
raised by appellant's motion for judgment of acquittal made at the close
of the case.
The
net worth method of computing income may be used only where a taxpayer
does not keep books or such books are inadequate in that they do not
clearly reflect income. See 26 U.S.C.A. §41. The jury was so instructed
in the present case, and the evidence is sufficient to sustain a finding
that appellant's records were inadequate. Ray Weaver, the special agent
in charge of the Bureau of Internal Revenue investigation, testified, as
an expert, that in his opinion the records of the enterprises in
question were not adequately kept. Specific illustrations of such
inadequacy were given by Weaver and other witnesses. 11 As
hereinbefore stated, appellant's accountants had made a survey of the
records pertaining to appellant's business enterprises in the
Government's possession prior to trial. Therefore, the alleged failure
of the Government to introduce in evidence all such records in its
possession is not significant since if any records adequately reflecting
income were in existence appellant could have specifically requested
their production during the trial.
Appellant
attacks the accuracy of the Government's computation of his starting
point net worth, that is, his net worth on
December 31, 19
43. It was necessary for the Government to establish appellant's net
worth at the beginning of the period during which the alleged evasion
occurred in order to compare his increment in net worth with the income
actually reported by appellant on his and his wife's tax returns. The
fundamental question presented is what quantum of evidence must be
offered by the Government before a trial court can properly submit the
case to the jury. Whether sufficient evidence has been introduced in a
given case will of course depend upon the facts of that particular case.
In deciding whether the trial court properly denied appellant's motion
for judgment of acquittal, the evidence must be taken in the light most
favorable to the Government. Gendelman v.
United States
, 191 Fed. (2d) 993 (9th Cir. 1951) [51-2 USTC ¶9474]. Proof of the
exact amounts of unreported income is not required. The evidence is
sufficient if the jury is justified in finding therefrom, beyond a
reasonable doubt, that there has been a wilful attempt to evade taxes. United
States v. Johnson, 319 U.S. 503 (1943) [43-1 USTC ¶9470]; Goldbaum
v. United States, --Fed. (2d) -- (9th Cir.
April 13, 19
53) [53-1 USTC ¶9342].
In
the instant case the Government thoroughly investigated appellant's
potential sources of net worth. It was not incumbent upon the
prosecution to prove appellant's net worth to a mathematical certainty
before the case could be submitted to the jury. As the Fourth Circuit
said in Bell v. United States, 185 Fed. (2d) 302 (4th Cir. 1950)
[50-2 USTC ¶9499], cert. denied, 340 U.S. 930: "An estimate of the
taxpayer's net worth as the means of determining his income is resorted
to in the absence of accurate records which it is his duty under the
statute to make and to preserve, and by its very nature it is an
approximation; but it has been held in this and other jurisdictions
to be an appropriate method to support a criminal prosecution under the
statute * * *." (Italics supplied) 185 Fed. (2d) at 308. See also Gariepy
v. United States, 189 Fed. (2d) 459 (6th Cir. 1951) [51-1 USTC ¶9318];
Schuermann v. United States, 174 Fed. (2d) 397 (8th Cir. 1949)
[49-1 USTC ¶9281], cert. denied, 338
U.S.
831.
Reference
was made during the trial to a certain safe deposit box in which
appellant purported to keep money. Appellant contends that the
possibility that substantial funds were kept in the box destroys the
validity of the Government's net worth computations, yet appellant did
not attempt in any way at the trial to prove that substantial funds were
in fact kept in the box. Other evidence introduced at the trial, such as
the fact that a judgment of $1,800 obtained against appellant in 1938
was not paid until 1945, tended to show that appellant did not have
substantial cash at the beginning of 1944. Requests by the Government to
examine the contents of the safe deposit box were refused. If a
defendant could prevent a case of this type from being submitted to the
jury merely by stating he had further assets not taken into
consideration by the Government, yet refusing to disclose them,
enforcement of the tax evasion provisions of the Internal Revenue Code
would be completely frustrated. Skillful concealment cannot be made an
invincible barrier to proof. United States v. Johnson, supra, at
518. More than mere speculation is required to support a motion for
judgment of acquittal. The only affirmative evidence concerning the safe
deposit box in question was the testimony of one witness that on
December 3, 19
43 he placed $17,000 in the box. Were we to assume that this money
remained in the box on
December 31, 19
43, the Government's case would not fall since the net worth
computations, including the additional $17,000 as part of opening net
worth for 1944, would still show unreported income of $14,747.91 for the
year 1944.
Reliance
is placed by appellant upon the cases of Bryan v. United States,
175 Fed. (2d) 223 (5th Cir. 1949) [49-1 USTC ¶9322] 12 and United
States v. Fenwick, 177 Fed. (2d) 488 (7th Cir. 1949) [49-2 USTC ¶9448],
where judgments of conviction were reversed because of the insufficiency
of the evidence. This court, in Davena v. United States, 198 Fed.
(2d) 230, 231 (9th Cir. 1952) [52-2 USTC ¶9392], questioned the
"vitality" of the Fenwick case, and the majority
opinion in the
Bryan
case was accompanied by a strong dissent. Although these decisions may
well have been appropriate because of the particular facts there
involved, we believe the general language of the opinions too narrowly
limited the function of the jury as the triers of fact.
It
is true, as appellant contends, that proof of increased net worth is
only circumstantial evidence of taxable income. 13 The test to
be applied on motion for judgment of acquittal in such a case, however,
is not whether in the trial court's opinion the evidence fails to
exclude every hypothesis but that of guilt, but rather whether as a
matter of law reasonable minds, as triers of the fact, must
be in agreement that reasonable hypotheses other than guilt could be
drawn from the evidence. 14 Stoppelli
v.
United States
, 183 Fed. (2d) 391 (9th Cir. 1950), cert. denied, 340
U.S.
864. If reasonable minds could find that the evidence excludes
every reasonable hypothesis but that of guilt, the question is one of
fact and must be submitted to the jury. Curley v.
United States
, 160 Fed. (2d) 229 (D.C. Cir. 1947), cert. denied, 331 U.S. 837; Stoppelli
v.
United States
, supra. Judged by this standard, the motion for judgment of
acquittal was properly denied in the present case.
Appellant
argues in his reply brief that even if there was sufficient evidence to
show a tax deficiency there was no evidence of fraud. A state of mind
can seldom be proved by direct evidence but must be inferred from all
the circumstances. A wilful intent to evade income taxes may be inferred
from such factors as appellant's failure to include a substantial amount
of income on his and his wife's tax returns, the failure to keep
adequate books which would clearly reflect income, and the concealment
of the ownership of property such as a safe deposit box, real estate
interests, and business licenses. These factors, all present in the
instant case, are but part of a general pattern of conduct engaged in by
appellant from which the jury could infer the requisite intent. See Norwitt
v.
United States
, 195 Fed. (2d) 127, 132 (9th Cir. 1952) [52-1 USTC ¶9252].
The
Government contended during the trial that certain unincorporated
business enterprises of the appellant were to be treated as sole
proprietorships for tax purposes, while appellant contended that they
were partnerships. 15 The test
for determining recognition of a partnership for federal income tax
purposes is whether "the parties in good faith and acting with a
business purpose intended to join together in the present conduct of the
enterprise." Commissioner v. Culbertson, 337
U.S.
733, 742 (1949) [49-1 USTC ¶9323]. This question is one of fact. Toor
v. Westover, 200 Fed. (2d) 713 (9th Cir. 1952) [53-1 USTC ¶9141]; Harkness
v. Commissioner, 193 Fed. (2d) 655 (9th Cir. 1951) [52-1 USTC ¶9141],
cert. denied, 343
U.S.
945. There is substantial evidence to support the Government's
contention that the alleged partnerships should not be recognized for
tax purposes. The record discloses among other things, that the
enterprises were financed by a single fund belonging to appellant, that
appellant made the policy decisions, that the purported partners were
not to acquire an interest in the assets of the business until appellant
had withdrawn an amount equal to his original capital investment, that
no profits were actually distributed during the years in question to
persons other than appellant, and that in at least one instance a new
partner entered the business without another partner knowing the terms.
Two
further contentions are made by appellant which pertain only to Counts
Three and Four, the counts based upon the year 1945.
(1)
Appellant asserts that in computing closing net worth for the year 1945
the Government improperly included $15,000 in markers or IOU's as cash
of the B-R Smoke Shoppe, one of appellant's enterprises. Regardless of
whether such markers should technically be treated as cash or accounts
receivable, they were properly included as part of the assets of the
business. Appellant can hardly rely upon the fact that the enterprise
was engaged in the illegal business of bookmaking, and that therefore,
under
California
law, the markers were unenforceable. It is obvious that appellant
accepted markers as a substitute for cash from his customers because he
thought he could find certain effective if not legal means of enforcing
them. He considered the markers to be assets of his business, capable of
being reduced to cash. We do not believe as a practical matter he was
mistaken.
(2)
In computing closing net worth for the year 1945 the Government
recognized a debt of $100,000 owed by appellant to Gene Schriber as part
of the $175,000 purchase price of the Menlo Club. Appellant argues that
actually a sum of $125,000 was owing at the end of 1945. His position is
supported by the testimony of Schriber and what purports to be a page of
the 1947 Menlo Club ledger, this ledger being part of the records given
to appellant's accountant Semenza prior to the trial and subsequently
impounded with the court clerk by order of the Court during the trial.
The Government relies upon a photostat of a page of the 1945 ledger of
the Menlo Club, stating that the original was part of the records given
to Semenza, that this page was never returned, and that the alleged page
of the 1947 ledger upon which appellant relies first made its appearance
upon return of the records to the clerk of the court. Appellant seeks to
explain the inconsistency in the ledgers by stating that the first
payment of $25,000 was returned to appellant so that a check for the
same amount could be substituted in order to enable appellant to keep a
record of the transaction. It is said that the 1945 ledger is in error
in that it treats this transaction as two separate payments. This was a
question of fact for the jury; it was resolved against appellant.
IV.
Admissibility of Evidence.
Complaint
is made to a number of rulings by the trial court in regard to the
admission and exclusion of evidence during the course of the trial.
Appellant's contentions must be considered in conjunction with the
salutary rule that the discretion of the trial court should not be
disturbed in such matters unless the accused has been deprived of
substantial rights. See Fed. R. Crim. P. 52(a). Upon reviewing the
alleged errors in the light of the aforesaid principle of law, we cannot
say that the District Court erred. See United States v. Johnson,
319
U.S.
503, 519-520 (1943) [43-1 USTC ¶9470].
Witness
Agnes Badobinatz was allowed to testify over appellant's objection, that
in February of 1947 her husband, now deceased, told her that he was
going to repay $5,000 he had borrowed from appellant. Appellant argues
that since there was no testimony as to when the obligation was incurred
the Government failed to lay a proper foundation for Badobinatz's
testimony. Admission of this testimony, however, could not have been in
any way prejudicial to appellant since the Government's final
computation of appellant's net worth did not include this $5,000 for any
of the years in question.
Witness
A.V. Brady, an agent of the Bureau of Internal Revenue, testified
concerning the investigation of appellant's tax liability and the
preparation of the net worth statement upon which the Government's case
was based. Appellant objects to Exhibit No. 183, the financial statement
prepared by Brady to reflect changes in appellant's net worth during the
years 1944-1946, which was admitted in evidence during the witness's
testimony. It is urged that there was insufficient evidence to support
admission of the statement. We have already held that the Government's
evidence was sufficient to take the case itself to the jury. The net
worth statement in question was constructed from all the evidence in the
case. There was, therefore, sufficient evidentiary basis in the record
for admission of the statement. Brady's estimate of appellant's federal
income tax liability based upon the net worth computation was also
admissible, since he was testifying as an expert witness.
During
the trial appellant had sought to prove that at the end of 1946 he owed
Robert Jeffress the sum of $50,000. The Court ruled that testimony by
Jeffress's wife that in July of 1947 her now deceased husband told her
of the debt and that part of it had been repaid was inadmissible. Since
the jury was unable to agree in regard to the counts of the indictment
pertaining to the year 1946, the propriety of this ruling is not before
us. We mention it, however, because of its connection with the
following: Appellant told the Court that James Jeffress, the son of
Robert Jeffress, was being called as a witness "to give testimony
which raises the identical issue which was presented to your Honor in
the matter of the testimony of Mrs. Jeffress, with relation to
conversation with her late husband." Since at that particular time
in the trial the prospective witness was unable to appear, appellant
merely made an offer of proof, his counsel stating that he assumed the
Court would make the same ruling as in the case of Mrs. Jeffress's
testimony. The offer was rejected. In the course of the rather extended
offer of proof there was one statement that in 1944 Robert Jeffress had
told his son that he owed appellant the sum of $10,000 for money
borrowed in 1943. Appellant now urges that the testimony of James
Jeffress would have been admissible to show this fact. It seems clear to
us that the offer of proof was at least primarily made to establish the
debt of appellant to James Jeffress at the end of 1946 rather than a
debt owed by Jeffress to appellant at the beginning of 1944. Appellant
had a duty to make the purpose of his offer of proof clear. Evidence
excluded for the only purpose for which it was offered cannot be
properly asserted on appeal to be admissible for another purpose
theretofore undisclosed. Flowers v. Bush & Witherspoon Co.,
254 Fed. 519 (5th Cir. 1918). It is the duty of the party making the
offer of proof rather than the Court to separate the various items of
evidence embraced in a single offer. Lane v.
United States
, 142 Fed. (2d) 249 (9th Cir. 1944).
Appellant
also contends that the Court unduly restricted the cross-examination of
witnesses Schriber, Weaver and Brady. The trial court may in the
exercise of its sound discretion limit the extent of cross-examination. Todorow
v.
United States
, 173 Fed. (2d) 439 (9th Cir. 1949), cert. denied, 337 U.S. 925; Chevillard
v. United States, 155 Fed. (2d) 929 (9th Cir. 1946). No abuse of
discretion appears.
V.
Instructions to the Jury.
Appellant
urges that the trial court failed adequately to instruct the jury on the
law applicable to the case in that the charge did not contain certain
supplementary instructions which had been proposed by appellant. 16 The
instructions given by the Court in the present case are similar in
substance to the instructions reviewed in Barcott v. United States,
16 Fed. (2d) 929 (9th Cir. 1948) [48-2 USTC ¶9377], cert. denied, 336
U.S.
912, where we held that the charge fully and fairly presented the law of
the case. Upon examination of the instant charge in its entirety, we
find that the instructions given fully protected the rights of
appellant.
The
instructions of the Court as to the net worth method of proving tax
evasion and the instructions as to the methods of accounting to be used
by a taxpayer were adequate when considered as a whole with the
instructions concerning the elements of the crime, the Government's
burden of proof, and other basic principles of criminal law applicable
to this case.
The
jury was also properly instructed as to the test for determining the
validity of a partnership for federal income tax purposes. The
instruction requested by appellant, requiring the jury to find a valid
partnership if certain testimony was believed, unduly emphasized
particular phases of the evidence and would violate the rule that the
question is one of fact to be decided from all the evidence.
Appellant
was not entitled to an instruction as to a possible inference to be
drawn from the Government's failure to introduce in evidence all of
appellant's business records in its possession. The records were
originally prepared by appellant's business associates, were accessible
to appellant prior to trial, and were at least surveyed by his
accountants subsequent to the commencement of the Government's
investigation of appellant's income tax liability. As we have previously
noted, if any specific records had been thought beneficial to his case,
appellant could have requested their production.
VI.
Fair Trial.
After
the jury had returned its verdict, appellant moved for a new trial. The
only new proposition asserted was that appellant had been substantially
prejudiced and deprived of a fair trial by reason of certain conduct on
the part of the jury, the Court, the prosecuting attorneys, and agents
of the Federal Bureau of Investigation. Appellant's counsel averred in a
supporting affidavit that the following facts were learned by them
subsequent to the verdict of the jury: that in the early stages of the
trial one of the jurors had been told by a person unknown to appellant's
counsel that the juror could profit by bringing in a verdict favorable
to appellant; that the juror thereupon reported this conversation to the
trial judge; that the trial judge discussed the matter with the
prosecuting attorneys, but did not at any time inform appellant's
counsel of the incident; and that the Federal Bureau of Investigation
was notified, conducted an investigation, and made a report to the trial
judge. It is appellant's contention that the juror to whom the remark
had been made would be apprehensive of being suspected of taking a bribe
if he voted for a verdict in favor of appellant, and would therefore be
prejudiced against appellant. The motion for a new trial requested the
opportunity for a hearing to adduce evidence concerning the various
conversations among the juror to whom the remark had been made, the
trial court, and agents of the Federal Bureau of Investigation "in
order to fully investigate the same to determine to what extent it had
any effect upon the jury and was prejudicial to the defendant."
The
District Court in denying the motion did not abuse its broad power to
grant or deny motions of this type, since there was a failure on the
part of appellant to show prejudice. The very newspaper articles upon
which appellant relies, and which were made a part of his motion,
disclose that the juror believed the statement had been made to him in
jest and only notified the trial judge because of his admonitions not to
discuss the case. The judge also believed the statement had not been
made seriously, but took the precaution of requesting an investigation
by the Federal Bureau of Investigation, which in fact substantiated his
belief that the remark had been made in jest. These circumstances do not
indicate prejudice to appellant. It is obvious that if in fact an
attempt had been made by persons associated with the defense to bribe a
juror disclosure of the planned investigation would have greatly
decreased the likelihood that such investigation would be successful.
Appellant relied solely upon the affidavit of defense counsel stating
what counsel had learned through the newspapers. If any jurors had
received communications from the trial court or the Federal Bureau of
Investigation of a nature which would tend to prejudice them against
appellant, or had been subjected to other extraneous influences, such
fact could have been appropriately presented by submitting affidavits of
the jurors themselves. See, for example, Clyde Mattox v. United
States, 146 U.S. 140 (1892).
Judgment
affirmed.
1
"26 U.S.C.A. §145. Penalties.
"*
* *
"(b)
Failure to collect and pay over tax, or attempt to defeat or evade tax.
Any person required under this chapter to collect, account for, and pay
over any tax imposed by this chapter, who willfully fails to collect or
truthfully account for and pay over such tax, and any person who
willfully attempts in any manner to evade or defeat any tax imposed by
this chapter or the payment thereof, shall, in addition to other
penalties provided by law, be guilty of a felony and, upon conviction
thereof, be fined not more than $10,000, or imprisoned for not more than
five years, or both, together with the costs of prosecution."
2
18 U.S.C.A. Federal Rules of Criminal Procedure.
III.
Indictment and Information.
"Rule
7. The Indictment and the Information.
*
* *
(f)
Bill of Particulars. The court for cause may direct the filing of a bill
of particulars. A motion for a bill of particulars may be made only
within ten days after arraignment or at such other time before or after
arraignment as may be prescribed by rule or order. A bill of particulars
may be amended at any time subject to such conditions as justice
requires."
3
Mr. Campbell, Government counsel, made the following statement:
"Mr.
Campbell: Well, we are in this position, your Honor--as Mr. Golden is
aware, the Government's case here is what is termed a net worth
case."
4
In computing appellant's income for the years 1944 and 1945 the
Government relied in part upon the net worth of the following
businesses: B-R Smoke Shoppe, Day-Nite Cigar Store,
110 Eddy Street
, and Menlo Club, all in
San Francisco
; 21 Club and San Diego Social Club, both in
El Cerrito
,
California
.
5
18 U.S.C.A. Federal Rules of Criminal Procedure.
IV.
Arraignment and Preparation for Trial.
"Rule
16. Discovery and Inspection.
Upon
motion of a defendant at any time after the filing of the indictment or
information, the court may order the attorney for the government to
permit the defendant to inspect and copy or photograph designated books,
papers, documents or tangible objects, obtained from or belonging to the
defendant or obtained from others by seizure or by process, upon a
showing that the items sought may be material to the preparation of his
defense and that the request is reasonable. The order shall specify the
time, place and manner of making the inspection and of taking the copies
or photographs and may prescribe such terms and conditions as are
just."
6
Mr. Semenza testified as follows concerning his acquisition of records
which were in the possession of the Government:
"Q.
[By Mr. Campbell] At the time you obtained those records, isn't it a
fact you were taken into a room where the records were and told you
could have anything you wanted? A. That is true.
"Q.
And you were the one who selected these particular records as they were
the pertinent records having to do with the matter which you were then
investigating, which was the liability of Mr. Remmer? A. That is right.
"Q.
They were the only records you considered of any use to you in that
connection? A. That's right."
7
However, another of appellant's counsel stated during oral argument of
the motion that counsel learned at an "early stage in this
case" that the Government had "quite an abundance of
records."
8
18 U.S.C.A. Federal Rules of Criminal Procedure.
IV.
Arraignment and Preparation for Trial.
"Rule
17. Subpoena.
*
* *
"(c)
For Production of Documentary Evidence and of Objects. A subpoena may
also command the person to whom it is directed to produce the books,
papers, documents or other objects designated therein. The court on
motion made promptly may quash or modify the subpoena if compliance
would be unreasonable or oppressive. The court may direct that books,
papers, documents or objects designated in the subpoena be produced
before the court at a time prior to the trial or prior to the time when
they are to be offered in evidence and may upon their production permit
the books, papers, documents or objects or portions thereof to be
inspected by the parties and their attorneys."
9
18 U.S.C.A. Federal Rules of Criminal Procedure.
IX.
Supplementary and Special Proceedings.
"Rule
41. Search and Seizure.
*
* *
"(e)
Motion for Return of Property and to Suppress Evidence. A person
aggrieved by an unlawful search and seizure may move the district court
for the district in which the property was seized for the return of the
property and to suppress for use as evidence anything so obtained on the
ground that (1) the property was illegally seized without warrant, or
(2) the warrant is insufficient on its face, or (3) the property seized
is not that described in the warrant, or (4) there was not probable
cause for believing the existence of the grounds on which the warrant
was issued, or (5) the warrant was illegally executed. The judge shall
receive evidence on any issue of fact necessary to the decision of the
motion. If the motion is granted the property shall be restored unless
otherwise subject to lawful detention and it shall not be admissible in
evidence at any hearing or trial. The motion to suppress evidence may
also be had. The motion shall be made before trial or hearing unless
opportunity therefor did not exist or the defendant was not aware of the
grounds for the motion, but the court in its discretion may entertain
the motion at the trial or hearing."
10
There is no indication in the record on appeal that the books and
documents were ever taken from appellant's possession illegally. At the
hearing on the motion for return of the books and documents and
suppression of their use as evidence, appellant sought permission to
adduce testimony as to the circumstances of the Government's original
acquisition of the records. The District Court held that appellant's
attempt to raise this question for the first time at that point in the
proceedings was not timely, relying upon the last sentence of Rule
41(e), Federal Rules of Criminal Procedure.
11
For example, William E. Kyne testified that he kept the records of the
B-R Smoke Shoppe: that these records consisted of a single entry each
day, whether business had lost or won; that this daily entry was a net
figure arrived at after all the expenses of doing business had been
paid, including salaries.
12
The Supreme Court granted certiorari to examine a procedural issue not
relevant to the instant case and affirmed the Fifth Circuit's holding on
that issue. 338
U.S.
552 (1950) [50-1 USTC ¶9140].
13
The District Court, in its instructions to the jury, properly explained
the nature and effect of circumstantial evidence.
14
We interpret Karn v. United States, 158 Fed. (2d) 568 (9th Cir.
1946), as holding in that case's factual context that no reasonable jury
could have found that the evidence excluded every reasonable hypothesis
but that of guilt.
15
The enterprises in question included the B-R Smoke Shoppe, Day-Nite
Cigar Store,
110 Eddy Street
, and the Menlo Club. The extent of appellant's interest in the 21 Club
and the San Diego Social Club was not in dispute.
16
The Government cites Ziegler v. United States, 174 Fed. (2d) 439
(9th Cir. 1949), cert. denied, 338 U.S. 822, in contending that there
could be no objection to any portion of the charge to the jury until the
charge was given and that appellant has accordingly failed to satisfy
the requirements of Rule 30, Federal Rules of Criminal Procedure. The
facts in the Ziegler case were that the only objection made was
at the time requested instructions were exchanged by counsel, and no
objection was taken when the Court informed counsel of his proposed
charge prior to final jury arguments. In the present case, on the other
hand, objection was made by appellant to the instructions at the time
provided by the Court, which was after the Court informed counsel of his
proposed charge but prior to closing arguments to the jury. Since the
record clearly discloses that the Court and counsel for both sides
considered the procedure sufficient to satisfy Rule 30, and since the
purpose of the rule has been served by giving the trial court
opportunity to correct alleged errors in his charge, appellant's
objections to the instructions have not been waived. Plain error in
instructions should of course be noticed regardless of whether the
matter was properly brought to the attention of the trial court. Fed. R.
Crim. P. 52(b): see such earlier cases as Screws v. United States,
325
U.S.
91, 107 (1945); Morris v.
United States
, 156 Fed. (2d) 525, 527 (9th Cir. 1946).
[54-2 USTC
¶9449]Vaughn H. Mitchell and Dorothy Mitchell, Appellants v.
United States of America
, Appellee
(CA-9), In the United States Court
of Appeals for the Ninth Circuit, No. 13,884, 213 F2d 951,
June 7, 19
54
Appeal from the United States District Court for the Northern District
of California, Southern Division.
Criminal prosecution: Cross-examination: Instructions to jury:
Admissibility of evidence.--The appellants, a physician and his
wife, convicted of income tax evasion and conspiracy. During 1947 two
receipt books were kept, one for the morning receipts and one for the
afternoon receipts. The morning receipts were handed to the physician's
wife and the afternoon receipts deposited in a bank. The appellate court
found that there was no abuse of discretion by the trial court in
limiting the cross-examination of the physician's employee, that the
instructions to the jury that the prior acquittal involving the years
1942-1946 was not to be considered in determining guilt or innocence on
the present charges were proper and that evidence of deficiencies for
the years 1938-1941 was admissible..
Kent
& Brookes, Valentine Brookes, Arthur H. Kent, Paul E. Anderson, San
Francisco, Calif., for appellants. Lloyd H. Burke, United States
Attorney, John Lockley, Assistant United States Attorney, Macklin
Fleming, Special Assistant to United States Attorney, San Francisco,
Calif., for appellee.
Before
HEALY, ORR, and LEMMON, Circuit Judges.
LEMMON,
Circuit Judge:
It
is familiar technique for an appellant to seize upon every peccadillo
committed by the lower court and magnify it until it becomes a blunder
of major proportions.
The
present case is no exception.
Although
nine errors have been specified in this appeal, only three need be
discussed.
The
most serious objection is that the trial judge did not allow appellants'
counsel to cross-examine one of "the prosecution's key
witnesses".
The
appellee replies that, on the contrary, there was full cross-examination
by the defense. It is pointed out that the witness in question was
friendly to the appellants, and that the lower court limited the
appellants' use of leading questions addressed to her.
Properly
to evaluate this asserted error, it must be considered in its factual
setting.
1. Statement of The Case
The
indictment was based upon 18 USCA §371 and 26 USCA §145(b). The
appellant Vaughn H. Mitchell was convicted on three counts. Counts 1 and
2 charged him with attempting to defeat and evade a large part of an
income tax due by him and his wife, Dorothy Mitchell. Count 5 charged
that he and his wife conspired to evade and defeat a part of their
income tax. Counts 3 and 4 charged Dorothy Mitchell with attempting to
defeat and evade a large part of her income tax, and Count 5 charged her
with conspiracy, as above stated. She likewise was convicted on the
three counts in which she was accused. All five counts of the indictment
related to the income tax for the calendar year 1947. In round figures,
it was alleged that $26,000 of net income was concealed and $18,000 of
tax was evaded. The indictment was filed on
August 21, 19
52.
Named
in the indictment as a conspirator but not as a defendant was Iris M.
Cowart, whose testimony, which will be fully discussed hereinafter,
played an important part in the case. On
August 11, 19
50, she was notified by the Bureau of Internal Revenue at
San Francisco
that "This office has under consideration a recommendation
involving the institution of criminal proceedings against you."
[Two Receipt Books Kept]
2. The Evidence
Only
so much of the evidence will be summarized as will indicate the
importance of the testimony as to which it is complained that full
cross-examination was not permitted.
Dr.
Vaughn H. Mitchell, one of the appellants herein, is a practicing
physician and surgeon in
San Francisco
. Mrs. Cowart was his employee from 1943 to 1948. During the crucial
year of 1947, she "took care of the Kardexes, . . . the billing and
the banking," handling the money and making deposits, and
"keeping the accounts". She said that she was "not a
bookkeeper".
Mrs.
Cowart testified that in 1947, probably in January, she had a
conversation with Mrs. Mitchell "with respect to keeping two
records of the books or giving her some money. . . . She was to get the
morning receipts, and I also confirmed it with Dr. Mitchell. . . . I
asked him if it was correct that I was to give Dorothy some money from
the office, and he said that was correct and to keep a record of
it."
Mrs.
Cowart added that she and Mrs. Mitchell "discussed keeping the
morning receipt as she (Mrs. Mitchell) was to have them, and then to
keep a record of it in a receipt book and to put my initials on the book
of the money" that she gave Mrs. Mitchell. The witness's best
recollection was that Dr. Mitchell told her to keep the morning receipts
in one set of books, and to change in the middle of the day, although
she was not sure whether she got "that impression from the
conversation with Dorothy Mitchell".
At
any rate, Mrs. Cowart recalled Dr. Mitchell's saying that "he
wasn't putting all the money in one account in the bank, that Dorothy
Mitchell was to have some of the money".
The
witness said that she kept "two receipt books", "one for
the morning receipts and one for the afternoon receipts." At about
1 o'clock in the afternoon, she "switched receipt books",
"from the morning book to the afternoon book". "The money
from the morning book was given to Mrs. Mitchell, and the afternoon book
was deposited as it always had been." Mrs. Mitchell would come to
the office once a month or once every six weeks to pick up the money.
Mrs.
Cowart continued to hand money to Mrs. Mitchell throughout the year
1947, during which time the witness delivered "not over
$15,000" to the doctor's wife.
This
unique system of "double entry bookkeeping" ended in December,
1947. In the latter part of January or February, Mrs. Cowart took the
six or seven "morning receipt books" to Mrs. Mitchell at the
latter's apartment. Mrs. Cowart had planned to leave Dr. Mitchell's
employ at the end of December, 1947, but there was difficulty in getting
a girl to replace her, and she actually quit at the end of February,
1948.
The
appellee not only concedes that Mrs. Cowart was an important witness
against Dr. Mitchell, but it emphasizes the damaging nature of her
testimony. In its brief, the appellee says:
"At
the trial the testimony of Mrs. Cowart established Dr. Mitchell's
participation in every important phase of the scheme--its initiation . .
., suspension during Mrs. Cowart's vacation . . ., termination at the
end of the year . . ., and delivery of the hidden set of cash receipt
books to Mrs. Mitchell . . ."
[Examination of Witness]
3. The Trial Judge Did Not Unduly Restrict Defense Counsel's
Cross-Examination of Mrs. Cowart
In
the official transcript of record before us, defense counsel's entire
questioning of Mrs. Cowart is labeled "Cross-Examination".
This, of course, is not conclusive that the Court permitted an adequate
cross-examination of the witness. To determine this question, a careful
analysis of the queries propounded to her is necessary, as well as some
examination of the factual background.
Mrs.
Cowart had testified before the grand jury that had brought in the
present indictment, and at the trial was called as an adverse witness by
the appellee. Dr. Mitchell was her physician, and she was a close
personal friend of Mrs. Mitchell, whom she had known for fifteen years.
Mrs. Mitchell herself testified regarding the relationship between the
two women: "We are exceptionally good friends". It will be
observed that Mrs. Mitchell here used the present tense, and was not
referring merely to the feeling that existed between the two women
before the income tax troubles arose.
Defense
counsel examined Mrs. Cowart at great length. After the questioning had
proceeded for several minutes--represented by ten pages of the printed
transcript--Mrs. Cowart was excused from the stand when a message was
received by the Court that her husband was in a dying condition at a
local hospital.
Eight
days later, the examination was resumed, continuing for 12 more
transcript pages before it was interrupted by counsel for the appellee.
It should be noted that from the very beginning of his questioning of
the witness, up to the time of the interruption, the defense attorney
himself had repeatedly referred to his queries as
"cross-examination".
The
interruption came when the defense attorney started to question Mrs.
Cowart as to how money was being deposited (presumably by Dr. Mitchell)
in 1947. The transcript shows that the following colloquy occurred:
"Q.
Do you remember whether Appling (Special Agent) or Green (Internal
Revenue Agent), either singly or together, any way, around the first of
April of 1947 asked you anything about how money was being deposited in
1947, all the money was being deposited?
"A.
No, I don't remember that.
"Q.
To the best of your recollection was any such conversation ever had with
you by either Green or Appling?
"A.
No.
"Q.
As a matter of fact, at that time, Mr. Green (sic), in the spring of
1947, they were concerned with and investigating 1947 and 1946, isn't
that right?
"Mr.
Fleming (counsel for the appellee). Well, I object to this.
"Mr.
Dana (counsel for the appellants). I am asking if she knows.
"Mr.
Fleming. Mr. Dana is testifying, not even asking the questions.
"Mr.
Dana. This witness is for the purpose of cross-examination.
"Mr.
Fleming. This is an adverse witness, and I will object to this as a
leading question. Leading questions are normally permissible under
cross-examination. However, that rule is subject to an exception where
the witness proves to be in favor of the party who is the
cross-examiner, and the danger of leading questions--
"The
Court. Sustained.
"Mr.
Dana. Let me clarify it, so I won't abridge your Honor's ruling,
trespass on your Honor's ruling:
"This
lady is put into the case as an alleged conspirator by the Government,
called by them, and a lot of hearsay testimony admissible under that
rule of conspiracy has been introduced. I don't believe I am limited to
the rule of a person asking questions as a direct examiner, they
bringing her here, I didn't.
"The
Court. They brought her here in the capacity of an adverse witness and
so announced to the Court.
"Mr.
Dana. They call her a conspirator. Am I not allowed to cross-examine
her? I will abide by the Court's ruling, but it seems to me I shouldn't
be placed in that position.
"The
Court. You will ask direct questions.
"Mr.
Fleming. Mr. Dana can call the witness himself as his own witness and
question fully in regard to these things.
"Mr.
Dana. I will determine the defense, subject to the Court's ruling.
"The
Court. I have already ruled. You shall ask direct questions.
"Mr.
Dana. And treat this witness as practically--I mean, I may not
cross-examine?
"The
Court. That is correct.
"Mr.
Dana. Very well, your Honor, I will abide by that."
Nevertheless,
defense counsel did not give up trying. Fourteen times he asked Mrs.
Cowart questions to which the attorney for the appellee objected as
leading. Each time the Court sustained the objection.
Nor
did the Court's sustaining of the objections defeat defense counsel in
his attempts to ask questions that he believed might elicit the
information he desired. The very first of the fourteen questions
referred to above is typical. Referring to the plan to keep separate
receipt books, already outlined, counsel asked:
"Q.
Do you remember the substance or can you remember with any particularity
your conversation with Dr. Vaughn Mitchell concerning this?
"A.
Well, I believe I asked him if it was right that Dorothy was to have
some money from the office, the morning receipts, and kept in a
separate--and give her receipt book or something to that effect. I can't
remember any exact conversation that I had, how it was worded.
"Q.
Was the word 'receipt book' or the word a 'separate'--
"Mr.
Fleming: The question is leading, if the Court please.
"The
Court. Sustained."
Thereupon,
counsel reframed the question as follows:
"Q.
(By Mr. Dana): Can you tell us whether or not the word 'receipt book'
was used or the word (sic) 'a separate account of it'?"
To
this question, no objection was made, and the witness gave her answer.
It
is well settled that the extent of cross-examination and the restriction
of the use of leading questions rest in the sound discretion of the
trial court. St. Clair v. United States, 1894, 154 U. S. 134,
150; Alford v. United States, 1931, 282 U. S. 687, 694; Glasser
v. United States, 1942, 315 U. S. 60, 83.
The
object of examination is to get the facts. Whether direct or cross
questions best serve that end depends upon circumstances. The trial
judge is in a better position than is this Court to determine the
precise point at which the asking of leading questions should be brought
to a halt. He sees the witness and hears the testimony, and thus has a
better opportunity to assess the true situation existing at any given
posture of the case, than can we from the cold record. The discretion of
an experienced trial judge in this, as in other respects, should not be
lightly disregarded.
We
find that the trial court did not abuse its discretion in limiting the
cross-examination of Mrs. Cowart.
[Prior Indictment]
4. Testimony Relating To Dr. Mitchell's Income Taxes For 1942-1946
Concededly Was Admissible, And The Appellants Are Not In Position To
Complain Of The Instructions Thereon
On
February 16, 19
49, Dr. Mitchell was indicted on five counts on the charge that he
"did wilfully and knowingly attempt to defeat and evade" his
income tax for the years 1942-1946, inclusive. A sixth count charged
that he "attempted to defeat and evade" Mrs. Mitchell's income
tax for 1946. All six counts were based on 26 USCA §145(b). Dr.
Mitchell was acquitted on all counts.
Much
evidence was introduced by the appellee concerning the investigation for
1942-1946. The appellants "have . . . not challenged the
admissibility of the evidence, but merely the failure of the trial judge
to instruct the jury properly about the inferences that could be drawn
from it".
The
relevancy of this evidence is clear. The record shows that on
November 5, 19
46, Agent Green had the following conversation with Dr. Mitchell:
"A.
I told the doctor that I had just finished adding up the bank deposits
for the years 1942 through 1945 and had compared them with the gross
receipts as reflected on his tax returns for those years and had found a
large discrepancy.
"Q.
What did he say to that?
"A.
He asked me if I had any idea of what the figure was, and I told him I
could only give him a very preliminary estimate and the figure I quoted
to him was $100,000.
"Q.
And how did you tell him you had arrived at that figure?
"A.
I told him I had arrived at it by totalling the bank deposits.
* * *
"He
asked--I don't remember whether it was just at that very moment or a
little while later if he asked that--that he asked whether he should
have an accountant.
* * *
"I
told him that since the girls had mentioned and had told me that all
money that was taken in by the profession was deposited and that all
expenses of his practice were paid by check, that an accountant would
not be necessary because they get the figures right from the bank
account and right from the checking account and that if there was any
problem that they ran into I was available for him as we are in all
cases.
"Q.
Did you say what figures could be used for gross income?
"A.
I told him that the bank deposits, since I had been informed all money
was put in that account or accounts, would be the basis of his gross
receipts."
As
has already been stated, there is evidence that the appellants, in
January, 1947, evolved the scheme relating to the double sets of cash
receipt books. Since that plan was hatched a month or two after the
above conversation with Agent Green, it is the appellee's theory that
the appellants' ingenious double-book plot was unwittingly suggested to
them by Agent Green. In other words, under the new scheme, the bank
deposits would no longer reflect the Doctor's gross income.
The
above-quoted testimony of Green supports that theory and was properly
admitted.
The
appellants, however, specify as error the trial court's failure to
instruct the jury that Dr. Mitchell's acquittal on similar charges for
the years 1942-1946 "conclusively established that no wilful
attempt to evade taxes had been made in those years".
The
court charged as follows:
"You
are instructed that the guilt or innocence of Dr. Vaughn H. Mitchell on
charges of tax evasion for the years 1942 to 1946, inclusive, is not to
be considered by you in determining his guilt or innocence on the
charges which are now before you, nor are you to consider for any
purpose whatsoever the result of any previous trial."
The
appellants do not deny that they failed to comply with Rule 30 of the
Rules of Criminal Procedure, in that they did not object to this
instruction before the jury retired, "stating distinctly the
matter to which" they objected and "the grounds"
of their objection. They assert, however, that they "brought out
this point sharply on their argument for a new trial". Such an
objection, of course, is not a compliance with Rule 30. Neither is it a
compliance with our Rule 18(2)(d), which provides in part:
"When
the error alleged is to the charge of the court, the specification shall
set out the part referred to totidem verbis, whether it be in
instructions given or in instructions refused, together with the
grounds of the objections urged at the trial." (Italics
supplied.)
The
instruction complained of dealt with a special fact-situation of the
case at bar, and was not of a "stock" nature. It was therefore
of a type that comes peculiarly within the sweep of Rule 30, as was
pointed out at some length by us in the recent cases of Kobey v.
United States, 9 Cir., 1953, 208 Fed. (2d) 583, 587-588, 597-598
[54-1 USTC ¶9106], and Benatar v. United States, 9 Cir., 1954,
209 Fed. (2d) 734, 743-745 [54-1 USTC ¶9174], certiorari denied
May 24, 19
54. 1
But
even if the instruction in question were to be considered on its merits,
it would be found that the appellants have no substantial cause for
complaint. Their own brief sets forth that the evidence "about the
Doctor's understatement of income in his return (was) for the avowed
purpose of establishing a pattern of wilful conduct which persisted into
the year in question." The instruction thus frustrated the
appellee's strategy completely, for the trial court bluntly and
unqualifiedly told the jurors that they were not to consider the
question of guilt or innocence under the 1942-1946 charges against Dr.
Mitchell "in determining his guilt or innocence on the charges
which are now before you".
Finally,
a study of the record convinces us that the jury could have had no doubt
of Dr. Mitchell's acquittal on the earlier charges.
[Deficiencies for 1938-1941]
5. Evidence Of Deficiencies In Income Taxes For The Years 1938-1941
Was Properly Admitted Against Dr. Mitchell
The
appellants also complain that "The Court committed reversible error
in permitting the prosecution to introduce evidence, over objection, of
deficiencies" in Dr. Mitchell's income taxes for the years
1938-1941, inclusive.
As
to Dr. Mitchell himself, the evidence was admissible, relating as it did
to "other transactions or a course of fraudulent conduct . . . to
establish fraudulent intent as an element of the crime charged." Michelson
v. United States, 1948, 335
U. S.
469, 475-476, note 8. 2
With
regard to how remote such similar acts may be in point of time, the
discretion of the trial court is broad. In II Wigmore on Evidence, Third
Edition, 1940, Section 316(2), Page 217, we find the doctrine thus
stated:
"(2)
The length of time over which we may range in search of
evidential instances is obviously determinable by no fixed rule. The
precedents illustrate various lengths of time. The discretion of the
trial Court should here control."
As to Mrs. Mitchell, the
appellants assert that "Dorothy Mitchell had no connection
whatsoever with the Doctor's tax returns and tax liabilities forth years
1938-1941. She did not marry him until 1944." No objection on Mrs.
Mitchell's special behalf, however, was made by the appellants to the
admission of this testimony; counsel merely remarked that he didn't
"believe that is material to this, to anything in this
inquiry". Furthermore, the jury was in no way misled, for the
questioning on this subject repeatedly specified Dr. Mitchell only:
"Now, with respect to 1938, will you tell us what was the amount
reported by Dr. Mitchell?", "Will you tell me how much was
reported by Dr. Mitchell in 1940?", "These (figures)
represent, as I understand it, the actual income that you determined in
your investigation in the spring of 1947 that the Doctor made in 1938,
1939, 1940 and 1941?", etc. There was no prejudicial error here.
6. Conclusion
The
appellants specify a number of other asserted errors, which need not be
discussed here. We have considered them all and find that they exhibit
no reversible error.
This
Court is convinced that each appellant received a fair trial, and that
there was abundant evidence to support their conviction. Each judgment
is therefore.
Affirmed.
1
See also Boyd v. United States, 1926, 271
U. S.
104, 108, and Ziegler v. United States, 9 Cir., 1949, 174 Fed.
(2d) 439, 448, certiorari denied, 1949, 338
U. S.
822.
2
See also McCoy v. United States, 9 Cir., 1948, 169 Fed. (2d) 776,
783, certiorari denied, 1948, 335
U. S.
898; Himmelfarb v. United States, 9 Cir., 1949, 175 Fed. (2d)
924, 941 [49-1 USTC ¶9313], certiorari denied, 1949, 338
U. S.
860; Norwitt v. United States, 9 Cir., 1952, 195 Fed. (2d) 127,
133 [52-1 USTC ¶9252], certiorari denied, 1952, 344
U. S.
817.
[54-1 USTC
¶9379]
United States of America
v. Nick Manno, Sam Manno, Fred Manno and Thomas Manno
United States of America
v. Samuel Pardy and Thomas Manno
In the United States District
Court for the Northern District of Illinois, 53 CR 421, 422, 118 FSupp
511, January 13, 1954
Criminal prosecution: Sufficiency of indictment.--Motion to
dismiss was denied on the ground that the indictment charging that
defendants attempted to evade income taxes for certain years by filing
false returns and understating net income sufficiently charged violation
of statute against attempted income tax evasion.
Criminal prosecution: Sufficiency of indictment: Joinder of counts.--As
a ground for motion to dismiss, defendants claimed that there was a
misjoinder of counts in that the indictments concerned different
persons, different tax years, with no allegation that the alleged
offenses arose out of the same act or transactions or constituted part
of a criminal scheme. There was no merit in the contention, because
those defendants who were partners in the same firms for similar periods
of time were joined in the indictments and the counts concerned the
individual returns of the partners for the years involved in the
duration of the respective firms' existence. All the partners' returns
would be directly affected by any misstatement in their firm's return.
Criminal prosecution: Defenses: Reason for prosecution.--It was
contended that the Internal Revenue officials discriminated against
so-called "racketeers," singling their cases out for
prosecution and not utilizing the statutory authority of compromise
under Code Sec. 3761 and that said Code Section is unconstitutional
since it contains no standard of
admin
istrative action. The contention was overruled on the ground that the
admin
istration of such matter lies in the discretion of the prosecuting
attorney.
Criminal prosecution: Evidence: Defendants' signatures procured
"by ruse."--Defendants argued that the Government by a
ruse procured their signatures by requesting them to call in person for
registered mail. The Court was of the opinion that there could be no
objection to the manner in which the Government procured the signatures
on registered letters.
Criminal prosecution: Evidence: Motion to suppress.--As the
ground for their motion to suppress, defendants asserted that they were
prevailed upon to deliver their books and records to the Government with
the understanding that the purpose of the investigation was civil and
not with a view to criminal prosecution. Since there was controversy as
to the circumstances surrounding the examination of the books and their
relinquishment to the Government, this controversy needs to be resolved
by evidentiary proof and defendants are entitled to a hearing in order
to determine the precise facts surrounding the investigation.
Criminal prosecution: Incrimination before Grand Jury.--Since
defendants had been subpoenaed to appear before the grand jury merely as
witnesses, there was no violation of their constitutional rights against
self-incrimination, even though they were later indicted by the same
Grand Jury.
Crawford
& Healy, One North La Salle Street, Chicago 2, Ill., for defendants
Nick Manno, Sam Manno and Fred Manno. George F. Callaghan,
105 West Adams Street
,
Chicago
3,
Ill.
, for defendants Samuel Pardy and Thomas Manno. Otto Kerner,
Jr.
,
United States
Attorney, 450
United States
Courthouse,
Chicago
4,
Ill.
, for plaintiff.
Memorandum and Order
HOFFMAN,
District Judge:
The
defendant Thomas Manno has moved to dismiss indictment 53 CR 421. The
defendants Thomas Manno and Samuel Pardy, by motion and amended motion,
have moved to dismiss indictment 53 CR 422.
The
defendants Nick Manno, Sam Manno and Fred Manno have moved to dismiss
indictment 53 CR 421 and to suppress and order the return of evidence.
The
indictment in 53 CR 421 is against Nick, Sam, Fred and Thomas Manno,
containing 16 counts charging violation of Section 145(b), 26 U. S. C.
This indictment was returned
June 22, 19
53. The indictment in general charges wilful and fraudulent evasion of
income tax liability by understating net income and resultant tax. The
first three counts relate to Nick Manno and cover the years 1947-1949.
The second three counts relate to Sam Manno for the same period. The
third three counts pertain to Fred Manno for the same period. The tenth
count concerns Thomas Manno for the year 1947. The eleventh count covers
all four Mannos in connection with the return of one Tremont for the
year 1947. The twelfth count concerns all Mannos in connection with the
return of one Manning for the year 1947. The thirteenth and fifteenth
counts concern Nick, Sam and Fred Manno in connection with the returns
of Tremont for the years 1948 and 1949. The fourteenth and sixteenth
counts concern Nick, Sam and Fred Manno in connection with the return of
Manning for the years 1948 and 1949.
The
indictment in 53 CR 422, also returned on
June 22, 19
53, charges a similar offense of income tax evasion in the first three
counts by Sam Pardy for the years 1948-1950, and in the second three
counts by Thomas Manno for the same three years.
The
motion to dismiss, filed on behalf of Thomas Manno in 53 CR 421, urges
(1) insufficiency of Counts 10, 11 and 12 for the following reasons: (a)
uncertainty of allegation of accusation; (b) failure to state an
offense; (c) insufficient averment of the elements of a crime, thereby
making it impossible for the defendant to prepare a defense; and (d)
vagueness of charge such as to violate the Sixth Amendment to the
Constitution; (2) improper joinder and consolidation of charges against
Thomas Manno in Counts 10 to 12, with charges against others in Counts 1
to 9, in that the various offenses charged are distinct and separate
offenses committed by others than Thomas Manno; (3) the large number of
counts containing misjoinder of parties and offenses results in the
confusion of the Court and the defendant, to his prejudice; (4) the
indictment violates the provisions of Rule 8 of the Federal Criminal
Rules.
The
motions to dismiss, on behalf of the four Mannos, and the motion to
suppress concern these issues:
1.
The Treasury officials have arbitrarily selected persons they deem to be
of the "racketeer" type to be prosecuted, and have therefore
unconstitutionally discriminated against them and refused to use the
authority to compromise given by Section 3761 of the Internal Revenue
Code. It is claimed also by the four Mannos that the Section itself is
unconstitutional inasmuch as it contains no standard of administrative
action.
2.
The evidence--certain books and records of the defendants--should be
suppressed and the indictments based on them quashed because they were
obtained from the defendants by the trickery of the Government
officials, who stated their investigation was for the determination of
civil liability of the defendants. The defendants therefore contend that
the evidence was obtained by unreasonable search and seizure.
The
defendants also argue that the Government by a ruse procured the
defendants' signatures by requesting them to call in person for
registered mail. The defendants also complain that they were subpoenaed
before the Grand Jury and forced to appear and that their claim of
privilege inevitably resulted in their testifying against themselves.
3.
It is claimed further that there is a misjoinder of counts in the
indictment inasmuch as the indictment concerns different persons,
different tax years, with no allegation that the alleged offenses arise
out of the same act or transactions or constituting part of a criminal
scheme.
A
separate motion to dismiss and an amendment thereto have been filed on
behalf of the defendants Samuel Pardy and Thomas Manno in 53 CR 422,
which raise substantially the same points above outlined.
The
Government has filed answers to the motions to dismiss based on
misjoinder, alleging that as to indictment 53 CR 421 the tax evasions
charged were predicated upon unreported partnership income for various
firms in which the several defendants or some of them were partners.
Extensive
briefs have been filed by the respective defendants and by the
Government in support of their positions. Inasmuch as the motions to
dismiss and to suppress raise related issues, they will be considered
together.
Sufficiency of Form of
Allegations of Indictments
As
above indicated, the defendants challenge the phraseology and form of
the indictments in many respects. There can be no quarrel with the
defendants' abstract statement of the rule of law that the
"defendant is entitled to such facts in the indictment as will
enable him to understand the accusation against him and to prepare for
his defense" or with the rulings of the cases aptly cited in
support thereof. However, indictments in phraseology paralleling the
instant indictments have been held sufficient against such an attack.
Reference is made to the case of Himmelfarb v. United States, 175
Fed. (2d) 924 [49-1 USTC ¶9313], where the Court said at page 925:
"Indictment
charging that defendants attempted to defeat and evade federal income
taxes for certain years by filing false tax returns and understating net
income and income tax sufficiently charged violation of statute against
attempted income tax evasion."
To
the same effect are the holdings in Cave v. United States, 159
Fed. (2d) 464 [47-1 USTC ¶9171]; Potson v. United States, 171
Fed. (2d) 495 [49-1 USTC ¶9119]; United States v. Yeoman-Henderson,
Inc., 193 Fed. (2d) 867 [52-1 USTC ¶9155]; Guzik v. United
States, 54 Fed. (2d) 618 [1931 CCH ¶9681]; and United States v.
Skidmore, 123 Fed. (2d) 604 [41-2 USTC ¶9716].
Misjoinder of Offenses and
Misjoinder of Defendants
In
answer to the defendants' assertions of misjoinder of offenses and
defendants, the Government states that if relief on that ground be
grantable at all it must be effected by severance of offenses or
defendants under Rule 14 and that a dismissal on the ground of
misjoinder is reversible error under the decision of the United States
Court of Appeals for the Fifth Circuit in the case of United States
v. Northeast Texas Chapter, National Electrical Contractors Association,
et al, 181 Fed. (2d) 30, and the case of Finnegan v. United
States, 204 Fed. (2d) 105, decided by the United States Court of
Appeals for the Eighth Circuit. In the latter case the Court said at
page 109:
"The
motion to dismiss for misjoinder need only be given passing notice.
Defendant was not in any event entitled to a dismissal of the
indictment because of misjoinder. (Citing cases)" (Italics
supplied)
The
Government's answer sets forth the factual bases for the joinder of the
defendants and offenses and makes it sufficiently clear that there is a
logical reason for their joinder. These various defendants were partners
in different firms for varying periods of time. Those who were partners
in the same firms for similar periods of time were joined in the
respective indictments. The counts, though numerous, concern the
individual returns of the respective partners for the years involved in
the duration of the respective firm's existence. Since the gist of the
indictments is the understatements of the partners' individual returns
by the amounts unreported in the respective firm's income tax returns,
there is a definite and unifying core around which revolve the numerous
offenses and defendants charged in the indictments. It is obvious that
all the individual partners' returns will be directly affected by any
misstatement in their firm's return.
Rule
8 of the Federal Rules of Criminal Procedure provides the criteria for
joinder to be "whether the offenses charged are of the same or
similar character or are based on the same act or transaction or on two
or more acts or transactions connected together or constituting parts of
a common scheme or plan" and defendants may be joined who are
alleged "to have participated in the same act or transaction or in
the same series of acts or transactions constituting an offense or
offenses * * *." Such a connection seems evident in this case.
In
the case of Morris v. United States, 12 Fed. (2d) 727 [1926 CCH
¶7126], the Court of Appeals for the Ninth Circuit sanctioned
consolidation for trial of six indictments charging partners with making
false partnership and individual returns. In the Skidmore case,
123 Fed. (2d) 604, an indictment covered charges of tax evasion for the
years 1933 to 1937 inclusive. The Court of Appeals for the Seventh
Circuit said at page 607:
"The
general form of this indictment has been approved by this court many
times." (Citing Capone v.
United States
, 56 Fed. (2d) 927 [3 USTC ¶885]; Guzik v. United States, 54
Fed. (2d) 618 [1931 CCH ¶9681]; and O'Brien v. United States, 51
Fed. (2d) 193 [1931 CCH ¶9474].)
As
to joinder in one indictment of counts covering tax evasion for several
years, the Court of Appeals for the Second Circuit said in the case of United
States v. Sullivan, 98 Fed. (2d) 79 [38-2 USTC ¶9429], at page 80:
"Although
the attempt to evade the tax for a given year is a separate offense from
an attempt to evade the tax for a different year; they are clearly
crimes 'of the same class.' Moreover, the evidence of intent to evade
the tax in one year is competent evidence of intent to evade the tax in
a later year. * * * Indeed, the crimes charged in the indictment
describe one course of conduct extending over several years, which
results in separate offenses simply because the duty to file a return
and pay the tax is one that recurs every twelve months. Under these
circumstances we think it very clear that joinder of the charges was
proper."
The
same evidential showing, that is to say, an understatement of
partnership income for a particular year will automatically affect each
partner's income for the year involved.
Constitutional Attack on Ground
That Statute Relating to Compromise Is Discriminatorially Used Against
"Racketeers"
It
is the defendant's contention that the Internal Revenue officials have
discriminated against so-called "racketeers", singling their
cases out for prosecution and not utilizing the statutory power of
compromise. In support of their position the defendants have cited cases
outlining the proper administration of Government, but none of them
touches closely to the instant case. These decisions may be summed up by
saying that citizens are entitled to equal protection of the law but
these decisions do not hold that citizens are entitled to equal
protection from the laws. The fact that not all criminals are
prosecuted is no valid defense to the one prosecuted. As the Government
points out, and many cases support its position, the administration of
such matter lies in the discretion of the prosecuting attorney. The
Government also calls attention to the fact that the designation of
"racketeer" type is unrelated to the return of indictments by
grand juries who have no knowledge of the Treasury Department's
characterization of the case.
Long
ago the Supreme Court, in the "Confiscation Cases", 74
U. S.
454, took this position:
"Public
prosecutions, until they come before the court to which they are
returnable, are within the exclusive direction of the district
attorney. * * *"
In
a suit where the
United States
sought forfeiture of an automobile, Judge Sparks stated (
United States
v. One 1940 Oldsmobile, 167 Fed. (2d) 404, at page 406) that:
"There
is quite a large discretion vested in the District Attorney to resubmit
a presentment to the Grand Jury, or to subsequent grand juries, and this
is not subject to the control of the District Court."
Obtaining Signatures of
Defendants in Registry Postal Office Through Trickery
Defendants
complain about the postal authorities requiring defendants to pick up
mail at the post office and signing therefor after identifying
themselves, instead of delivering the mail to their known addresses as
was customary, in order to obtain accurate signatures for use by
handwriting experts. The Government's reply is that, conceding for the
purpose of the motion the facts to have been as stated, they are
immaterial in connection with the question of a motion to dismiss,
inasmuch as it is not known whether they were introduced as evidence
before the Grand Jury, or whether the indictments were procured upon
other evidence legally introduced. In this connection the Government
cites Shushan v. United States, 117 Fed. (2d) 110; Friscia v.
United States
, 63 Fed. (2d) 977. The Court can find no fault with the
Government's procuring the signatures on registered letters. This is a
duty performed pursuant to regulation, although the Government may have
had an ulterior motive in requiring the defendants to pick up the
letters in person so that they might be certain to have the signature of
the defendants in person. The purpose of requiring signatures to
registered letters is to make absolutely certain that the addressee
receives the letter. The Government had that duty to the sender.
Motion to Suppress
The
defendants assert in their argument on their motion to suppress that
initially the Government agents made arrangements to have their usual
investigation of the books of the firms of which the defendants were
partners, as they had done in previous years, and permission was granted
to make the investigation. A subsequent investigation was made some
months later, and the circumstances surrounding that later investigation
gave rise to the instant motion. The defendants contend that the
Government agents by stealth and misrepresentation obtained permission
to make further examination of the books. The defendants assert that
they were "prevailed upon to deliver their records to Government
officials with the understanding that the purpose of the investigation
was civil and not with a view to criminal prosecution."
The
Government in its brief replies in substance that the defendants
voluntarily made their records available for the inspection of the
revenue agents at the time the investigation commenced, and that at that
time there was no evidence that criminal prosecution was contemplated;
that the facts show that the defendants had been investigated in the
past and that there had been no evidence uncovered by the investigating
agents of criminal fraud. The Government avers that there was no
occasion or necessity for warning the defendants that any statements
they might make or documents they might produce would be used against
them in a criminal prosecution. The Government asserts further that when
the revenue agent uncovered circumstances that indicated the possibility
of criminal fraud, the defendants were advised of these facts and told
that the matter would be turned over to the Intelligence Division. It is
evident that there is a factual controversy as to the circumstances
surrounding the examination of the books and their relinquishment to the
Government. In the opinion of the Court, this controversy needs to be
resolved by evidentiary proof. The principles of law relative to the
legality of investigations of books and the evidence procured therefrom
seem well settled. Evidence obtained by stealth is subject to a motion
to suppress. Gouled v.
United States
, 255
U. S.
298, at 305. On the other hand, evidence voluntarily furnished is
admissible inasmuch as the privilege against self incrimination may be
waived. Nicola v.
United States
, 72 Fed. (2d) 780 [4 USTC ¶1331]; Hanson v. United States,
186 Fed. (2d) 61 [51-1 USTC ¶9118].
The
Court is of the opinion that the defendants are entitled to a hearing in
order to determine the precise facts surrounding the investigation.
Violation of Fifth Amendment by
Forcing Defendants to Appear Before Grand Jury and Claim Privilege
Against Self Incrimination
The
defendants assert that the law condemns the calling of defendants before
the Grand Jury where they thereafter claim privilege against self
incrimination to their resultant detriment, and cite in support of this
position the cases of United States v. Lawn, 53-1 USTC ¶9288,
and United States v. Housing Foundation of America, 176 Fed. (2d)
665. The Government distinguishes these cases on the ground that they
involve persons against whom criminal proceedins had already been
brought and had resulted in information or indictments, whereas the
defendants here were merely witnesses when they were called before the
Grand Jury, and the Government insists that the law is well settled that
the appearance of a witness before a Grand Jury in response to a
subpoena does not constitute a violation of his constitutional rights
against self-incrimination even though the witness is later indicted by
the same Grand Jury. Many cases are cited by the Government to support
its contention.
The
Fifth Amendment, guarantee against self incrimination, is applicable to
investigations by a Grand Jury (United States v. Monia, 317 U. S.
424, 427) but as there said:
"The
Amendment speaks of compulsion. It does not preclude a witness from
testifying voluntarily in matters which may incriminate him. If,
therefore, he desires the protection of the privilege, he must must
claim it or he will not be considered to have been 'compelled' within
the meaning of the Amendment."
The protection afforded by the
Fifth Amendment is to permit a person to claim the privilege against
self-incrimination if he wishes so to do, but the Amendment does not
prevent his being called to testify where he makes his election
to testify or not to testify. As was said in O'Connell v. United
States, 40 Fed. (2d) 201, at page 205:
"The
final contention of the appellant is that regardless of the details of
his examination, it was a violation of his rights under the Fifth
Amendment to require him to be sworn and examined before the grand jury,
because its investigation, though ostensibly general, was in reality an
attempt to secure from his own mouth evidence upon which to indict him.
Some judicial support may be found for such a view. * * * But it has not
prevailed generally. * * * The mere summoning of a witness before the
grand jury gives no basis for the assumption that his constitutional
privilege will be impaired. * * *"
The
respective motions of the defendants in cases 53 CR 421 and 53 CR 422
for the dismissal of the indictments are denied.
[58-1
USTC ¶9173]George M. Mason, Appellant v.
United States of America
, Appellee
(CA-10), U. S. Court of Appeals,
10th Circuit, No. 5639, 250 F2d 704, 12/18/57, Affirming unreported
District Court decision
[1939 Code Sec. 145(a)--similar to 1954 Code Sec. 7203]
Crimes: Due process of law: Right to waive trial by jury and demand
trial by the court: Right to plead nolo contendere: Admission of
evidence.--Taxpayer is appealing a conviction on either counts of
wilfully and knowingly failing to make and file income and employment
tax returns, on the ground that he was denied due process of law. Held,
the right to waive a trial by jury and demand a trial by the court is
not an absolute one, but must be with the approval of the court and
consent of the government. Held further, the trial court did not
abuse its discretion in refusing to accept a plea of nolo contendere. Held
further, the taxpayer was not prejudiced by any admission or
exclusion of evidence. Conviction affirmed.
Walter
L. Budge for appellant. C. Nelson Day, Assistant United States Attorney
(A. Pratt
Kesler
,
United States
Attorney, was with him on brief), for appellee.
Before
HUXMAN, MURRAH and BREITENSTEIN,
United States
Circuit Judges.
HUXMAN,
Circuit Judge:
Appellant
George M. Mason, was duly tried and convicted by a jury on an eight
count information in the United States District Court for the District
of Utah. Count one and two charged him with wilfully and knowingly
failing to make and file an income tax return for the years 1952 and
1953, respectively. Counts three through eight charged him with wilfully
and knowingly failing to file employment tax returns for the periods set
out in the various counts. Trial was had to a jury and it found
appellant guilty on all counts. He was sentenced to serve six months and
one day on each of counts one, two, three and four, the sentences being
made to run concurrently. Sentence on counts five, six, seven and eight
was suspended and as to those counts he was placed on probation for two
years.
One
general assignment of error is urged for reversal. It is that
"Trial of appellant in the court below was not conducted in a
manner 'fair' as guaranteed by the Constitution of the
United States of America
." The gist of this is to say that the trial resulted in a denial
of due process. This general assignment is broken down into three parts.
[Right to Trial by Court]
It
is urged that the court violated appellant's Constitutional rights by
requiring trial by jury. Appellant sought to waive trial by jury and
requested a court trial. Over appellant's objection, the court submitted
the case to a jury for trial. Trial by jury is guaranteed to an accused
by the Sixth Amendment to the Constitution and by Article 3, Section 2
of the United States Constitution. It is argued that trial by jury is a
privilege accorded to the accused which he may waive and when waived by
him and a trial by the court is requested the request must be granted.
In
most cases where this question has been considered the accused had
waived the right to a jury trial and the question then arose whether
there was a valid Constitutional waiver of such right. No cases are
cited and our search has failed to reveal one in which the precise
question of an accused's right to waive a jury trial and demand trial by
the court was in issue. We, however, feel that the philosophy of the law
is well established that the trial court is vested with a sound
discretion in determining whether a jury trial should or should not be
had, notwithstanding the accused's request that he be tried to the
court. Such is the sense of Rule 23(a) of the Federal Rules of Criminal
Procedure which provides that "Cases required to be tried by jury
shall be so tried unless the defendant waives a jury trial in writing
with the approval of the court and the consent of the government."
Under this rule, the right to waive a jury and be tried to the court is
not an absolute one; it requires the approval of the court and the
consent of the government. Such we think is also the philosophy of the
law as declared by the Supreme Court in Patton v. United States,
281
U. S.
276, 312, where the Court said:
"In
affirming the power of the defendant in any criminal case to waive a
trial by a constitutional jury and submit to trial by a jury of less
than twelve persons, or by the court, we do not mean to hold that the
waiver must be put into effect at all events. That perhaps sufficiently
appears already. Trial by jury is the normal and, with occasional
exceptions, the preferable mode of disposing of issues of fact in
criminal cases above the grade of petty offenses. In such cases the
value and appropriateness of jury trial have been established by long
experience, and are not now to be denied. Not only must the right of the
accused to a trial by a constitutional jury be jealously preserved, but
the maintenance of the jury as a fact finding body in criminal cases is
of such importance and has such a place in our traditions, that, before
any waiver can become effective, the consent of government counsel and
the sanction of the court must be had, in addition to the express and
intelligent consent of the defendant. And the duty of the trial court in
that regard is not to be discharged as a mere matter of rote, but with
sound and advised discretion with an eye to avoid unreasonable or undue
departures from that mode of trial or from any of the essential elements
thereof, and with a caution increasing in degree as the offenses dealt
with increase in gravity." 1
[Right to Plead Nolo Contendere]
Appellant's
contention that the trial court violated due process in refusing to
accept appellant's offer to plead nolo contendere is not well taken.
Rule 11 of the Federal Rules of Criminal Procedure provides that "A
defendant may plead not guilty, guilty or, with the consent of the
court, nolo contendere * * *" It is not necessary to decide whether
a refusal to accept a plea of nono contendere under certain
circumstances may constitute an abuse of descretion. All the cases hold
that the trial court is vested with a broad discretion in determining
whether a plea of nolo contendere shall be accepted. 2 The record
is devoid of any suggestion that the court abused its discretion in
refusing to accept the plea.
[Admission of Evidence]
Finally,
it is contended that such grave errors were committed throughout the
trial in the admission and rejection of evidence as to result in the
denial of due process. We have examined the lengthy record of 375 pages.
It contains a great amount of detailed evidence relating to receipt of
money by appellant, not only in the years in question but in other years
as well, with respect to his failure to file income tax returns in a
number of years other than the ones in question. There was also a great
deal of detailed evidence of questionable probative value, cumulative
evidence, and matters of that kind. It may be conceded that much of this
evidence might well have been eliminated. It is sufficient, however, to
say that there was little objection to the receipt of any evidence. The
trial court gave clear, full and correct instructions on all material
issues. Assuming without deciding that evidence was erroneously received
and that some was also excluded, none of it was of such a nature as to
be offensive to the concept of a fair and impartial trial as
contemplated by what is meant by due process. In other words, the record
is devoid of any suggestion showing that the trial was not carried on in
a wholesome manner having due regard to the protection of every right
afforded appellant by the law of the land.
Affirmed.
1
Reaffirmed in Adams v.
United States
ex rel. McCann, 317
U. S.
269, 275.
2
United States
v. Standard Ultramarine & Color Co., 137 Fed. Supp. 167; A.
B. Dick Co. v. Marr, 95 Fed. Supp. 83;
United States
v. Jones, 119 Fed. Supp. 288;
United States
v. Safeway Stores, 20 F. R. D. 451.