Admissibility
4 Page2
This is
the extent of the testimony upon which prejudicial error is predicated.
It clearly appears that the witness Schmidt, a layman unversed in
judicial rules of evidence inadvertently and innocently referred to an
arrest of appellant in attempting to fix the time of a certain event.
There is not the slightest intimation that the fact of appellant's prior
arrest was mentioned intentionally, maliciously, or at the prompting of
the prosecuting attorney. It was simply such an immaterial incident as
can and does sometimes occur during a trial. The incident is closely
analogous to one that occurred in the case of Means v. United States,
D. C., 65 Fed. (2d) 206, where a prosecution witness testified that
defendant had told her he had been in prison. The appellate court, in
holding the admission of this evidence was not error, said: "It is
plain that this statement was not brought into the evidence for the
purpose of reflecting upon appellant's reputation or character, but was
purely incidental to the testimony relating to the conversation between
the witness and appellant, which necessarily disclosed the fact that
appellant at one time had been an inmate in the Atlanta
Penitentiary." Appellant here, in seeking a reversal of this case,
relies on United States v. James, 2 Cir., 208 Fed. (2d) 124,
wherein the court held that the admission in evidence in the
government's case in chief of defendant's prior arrest was reversible
error. But in that case the testimony concerning defendant's prior
arrest came from the lips of a government narcotics officer, who, it may
be assumed, was more familiar with courtroom rules of evidence than was
witness Schmidt in the present case. Admittedly, this distinction is a
thin one, and to the extent that the holding in the James case
may be inconsistent with our decision herein, we do not apply it. Under
the circumstances disclosed in the record here, the admission into
evidence of the testimony concerning appellant's prior arrest did not
constitute prejudicial error.
[Attempts to Influence Witness]
Appellant next assigns
error on the failure of the trial court to sustain his motion for
judgment of acquittal on Count One in No. 15,214, the obstruction of
justice indictment. Appellant contends that the evidence of the
government was insufficient as a matter of law to prove that Schmidt
was, during the time alleged in Count One of the indictment, a
"witness" within the intendment of section 1503, 18 U. S. C.
A. Count One of the indictment charged, and the government's evidence
showed, that appellant's endeavors to influence Schmidt to destroy his
records pertaining to Labor Health Institute transactions were made
during the period of February 21-23, 1954. Schmidt testified that it was
almost a month later, on
March 18, 19
54
, that he first met the revenue agents who were conducting the
investigation of the Labor Health Institute. And it was almost a month
thereafter, on
April 14, 19
54
, that Schmidt was subpoenaed and testified before the grand jury.
Although the offense charged in Count One allegedly occurred on
February 21-23, 1954
, Schmidt testified: "I didn't even know on March 18 [1954] that I
was going to have to testify. I had never told anybody on March 18th
that I wanted to testify. I didn't tell anybody anything. I didn't
express any desire to testify on March 18th."
The question of who is a
"witness" within the scope and meaning of section 1503 has
been before this court. In Smith v.
United States
, 8 Cir., 274 Fed. 351, the person defendant was charged with
endeavoring to influence had testified in a case, was discharged and
returned home, and had been requested to return for further testimony at
the time defendant assaulted him. In disposing of the contention that
the person was not under subpoena, and hence was not a
"witness" within the meaning of the statute, this court said:
"The terms of the
statute, the evil it was enacted to prevent, and the protection it was
intended to provide, leave no doubt that under its true interpretation
each of those who are subpoenaed to come, of those who are called and
accept the call to come without subpoenas, of those who are prompted to
come by their interests, of those who expect to come, and of those who
are selected and expected to come to testify in any case in any court of
the United States, falls within the class described by the terms 'any
witness, in any court of the United States,' in the section under
consideration."
In
Walker
v.
United States
, 8 Cir., 93 Fed. (2d) 792, a case charging defendant with
endeavoring to influence the testimony of a co-defendant in a pending
action, this court held:
"It was not necessary to prove that she [the co-defendant] had been
subpoenaed. She was such a witness if she then intended to testify on
the trial of the case then pending in the District Court. Smith v.
United States
, 8 Cir., 274 Fed. 351, 353. There is no evidence that she so
intended. * * * She did not say she would testify. The government
investigator did not ask her to testify. * * * There is no evidence that
the government desired to use her as a witness, even if she should waive
her immunity."
The decision in
Walker
v.
U. S.
, supra, is controlling here. The government adduced no evidence to
show that on February 21-23, 1954, Schmidt intended, desired, or
expected to testify before the grand jury or that the government had or
would request him to testify. On the contrary, Schmidt testified that as
late as
March 18, 19
54
, he had no desire, intent, or expectation of testifying. On
February 21-23, 1954
, the only information Schmidt had concerning the grand jury
investigation, as we view the record, was what appellant had told him.
This is hardly sufficient to qualify him as a "witness" under
the statute.
The government urges that
the test is "whether or not the defendant has reasonable grounds to
believe that the witness will be called before the grand jury, and
whether the witness is so called." Such a test might be applicable
in determining whether there was the required knowledge or notice on the
part of the defendant to authorize a conviction under the statute. We
need not now so decide. But we are cited to no case, and have found
none, where such a test was used to determine whether a person was or
was not a "witness" as that term is used in section 1503. Odom
v.
United States
, 5 Cir., 116 Fed. (2d) 996, relied on and quoted in the government
brief, does not, in our opinion, so hold. The quotation from the Odom
case that: "The knowledge necessary is not absolute or direct
knowledge that Stansbury [the witness] had testified or would testify;
but information or a reasonably founded belief thereof is sufficient to
make the requisite scienter; he being in fact a witness," quite
obviously refers to the knowledge of the defendant, as evidenced by the
preceding sentence, "Touching the knowledge of the accused, and
their specific intent to deal with Stansbury as a witness, the question
is closer." The court had no difficulty in the Odom case in
determining that Stansbury was a witness as he had already testified in
a case and was intending to return for another scheduled hearing at the
time defendant assaulted him.
We conclude that the
government wholly failed to prove that Schmidt was, at the time alleged
in Count One of the indictment in No. 15,214, a "witness"
within the meaning of section 1503 and that appellant's motion for
judgment of acquittal on that count should have been granted. Since
appellant was placed on probation for five years on both counts in No.
15,214, our decision on this question becomes important in the event
that probation is revoked and appellant brought before the court for
sentencing. 18
U. S.
C. A., section 3653.
[Admission
of Grand Jury Testimony]
Appellant also assigns as
error the admission into evidence, for purposes of impeachment, of his
prior grand jury testimony wherein he refused to answer certain
questions on the grounds that such answers might tend to incriminate
him. The refusal to give appellant's requested instruction to the effect
that his failure to testify before the grand jury constituted no
evidence of his guilt is also urged as error. Although this court has
not had occasion to pass upon this precise question, courts which have
done so have uniformly held that the admission of such testimony is
proper. Viereck v.
U. S.
, D. C., 139 Fed. (2d) 847;
U. S.
v. Klinger, 2 Cir., 136 Fed. (2d) 677;
U. S.
v. Gottfried, 2 Cir., 165 Fed. (2d) 360;
U. S.
v.
Groves
, 2 Cir., 122 Fed. (2d) 87. Also, see and compare the following: Raffel
v. U. S., 271
U. S.
494 (evidence of defendant's failure to testify at first trial held
proper); U. S. v. Mortimer, 2 Cir., 118 Fed. (2d) 266 (evidence
of defendant's failure to appear before grand jury held proper); U.
S. v. Buckner, 2 Cir., 108 Fed. (2d) 921 (evidence of defendant's
refusal to testify before Securities and Exchange Commission held
proper); Tomlinson v. U. S., D. C., 93 Fed. (2d) 652
(prosecutor's comment upon defendant's failure to testify before grand
jury, and upon defendant's explanation thereof, held proper). The rule
of law to be drawn from all these cases is that where a defendant elects
to take the stand in his own behalf he thereby waives his privilege of
immunity and becomes subject to cross-examination and impeachment the
same as any other witness. We discern nothing unjust or unfair in this
rule. It must be held, therefore, that the admission into evidence of
appellant's grand jury testimony was not improper. It was also not error
to refuse the requested instruction since the court had made it clear
during the trial that the evidence was being admitted to contradict
appellant's position taken on the witness stand.
[Conditions
of Probation]
Appellant next contends
that the condition imposed in the order of probation in No. 15,214,
to-wit, "that during the term of probation the defendant shall not
directly or indirectly hold any office in or employment by any
organization of labor or any organization affiliated, or sponsored by, a
labor union or a labor organization. Such conditions shall not prevent
defendant from being a member of any labor organization," was
beyond the authority of the sentencing court and ought to be expunged.
It seems rather anomalous to us that a person should complain of such an
order of probation when it was within the lawful authority of the trial
court to have given a sentence of ten years imprisonment and $10,000
fine under the two counts of the indictment. 18
U. S.
C. A., section 1503. However that may be, appellant's argument that the
condition imposed in the order of probation constituted an unlawful
invasion of his right to earn a living is untenable. The trial court was
of the opinion that the rehabilitation of appellant would proceed more
effectively if he disassociated himself from all union organizational
and administrative activity during the period of probation. Under the
provisions of 18 U. S. C. A., section 3651, the trial court "* * *
may suspend the imposition or execution of sentence and place the
defendant on probation for such period [not exceeding five years] and
upon such terms and conditions as the court deems best." The
granting of probation and the terms and conditions thereof are matters
clearly discretionary with the sentencing court. No abuse of discretion
has been shown here.
Appellant's final
contention on this appeal is that the trial court erred in refusing to
instruct the jury, on the income tax evasion counts in No. 15,215, that
it could find appellant guilty of the lesser offense contained in
section 3616(a), 26 U. S. C. A. This point has been decided adversely to
appellant's contention by this court in Dillon v. United States,
8 Cir., 218 Fed. (2d) 97 [55-1 USTC ¶9131], and we make the same ruling
on the point in this case so that appellant's record thereon is
preserved.
The judgment and sentence
on Count One in No. 15,214 are vacated and the cause of action set forth
in that count is dismissed. Judgment and sentence on Count Two of No.
15,214 and Counts One, Two and Three in No. 15,215 are affirmed.
1
Although appellant was officially business manager only until September,
1952, he performed the same duties for the remainder of 1952 and during
1953.
[47-1
USTC ¶9171]
Fred
C.
Cave
, Appellant v.
United States of America
, Appellee
(CA-8),
United States Circuit Court of Appeals for the Eighth Circuit, No.
13381, 159 F2d 464,
February 17, 19
47, Cert. denied, 331 U. S. 847, 67 S. Ct. 1732
Appeal from the District Court of the United States for the Southern
District of Iowa.
Penalties: Filing of fraudulent return.--It is sufficient to
sustain a conviction under Sec. 145(b), where the indictment charged a
willful filing of a false and fraudulent return--not a mere failure to
file any return, to prove there was willfully reported income.
Penalties: When crime committed.--The crime of willfully
attempting to defeat or evade the tax was complete on January 15, when
taxpayer willfully and knowingly filed a false and fraudulent return
with intent to defeat or evade any part of the tax due, and not March
15, the due date of the tax, as contended by the taxpayer. Therefore,
count 4 of the indictment was not insufficient in alleging false and
fraudulent action on
January 15, 19
45
.
Penalties: Expert testimony.--It was not prejudicial error to
admit expert testimony on taxpayer's income tax liability where
taxpayer's admission supported the jury's finding that taxpayer
willfully attempted to defeat and evade his taxes by filing false and
fraudulent returns.
Penalties: Instructions to the jury.--A trial court's judgment
will not be reversed for failure to give definite and consistent
instructions, in the absence of a seasonable request or exception,
unless the failure to so instruct constitutes a basic and highly
prejudicial error. Affirming a decision of the District Court for the
Southern District of Iowa.
Walter F. Maley; Charles W.
Bowers on brief for appellant. Meyer Rothwacks, Special Assistant to
Attorney General; Sewall Key, Acting Assistant Attorney General, J.
Louis Monarch and John Lockley, Special Assistants to Attorney General,
Maurice F. Donegan, United States Attorney, and William R. Sheridan,
Assistant U. S. Attorney, on brief for appellee.
Before GARDNER, THOMAS and
JOHNSEN, Circuit Judges.
[The
Facts]
THOMAS, Circuit Judge,
delivered the opinion of the court.
The appellant was indicted
and tried upon an indictment in four counts charging separately attempts
to defeat and evade federal income taxes for the years 1941 to 1944
inclusive in violation of §145(b) of the Internal Revenue Code, 26 U.
S. C. A. §145(b). He was acquitted by the jury on counts one and two
involving income taxes for 1941 and 1942 and convicted and sentenced on
counts three and four relating respectively to the taxes for 1943 and
1944, and he appeals.
The several counts of the
indictment are identical in form except as to dates and amounts of
income and taxes. The third count charged
That on or about the 15th
day of March, 1944, * * * Fred C. Cave, * * * did wilfully, knowingly,
unlawfully and feloniously attempt to defeat and evade a large part of
the income tax due and owing by him to the United States of America for
the calendar year 1943
(1) by filing and causing
to be filed with the Collector of Internal Revenue * * * a false and
fraudulent income tax return wherein he stated that his income tax net
income for said calendar year was the sum of $8455.00; that his victory
tax net income for said calendar year was the sum of $8,800.00; that the
amount of income and victory tax due and owing thereon was the sum of
$1,933.58, whereas, as he then and there well knew, his income tax net
income for the said calendar year was the sum of $55,611.60, * * * upon
which said net income he owed to the United States of America an income
and Victory tax of $30,843.69; and
(2) by concealing and
attempting to conceal from the said Collector and any and all proper
officers of the United States the true and correct gross and net incomes
received by him during the said calendar year and the sources thereof: *
* *
The fourth count charged
that appellant attempted to defeat and evade his 1944 income tax by
filing his return therefor on
January 15, 19
45, stating that his net income for the year was $788.04 and that the
amount of tax thereon was $8.64, whereas he well knew that his net
income for 1944 was the sum of $69,959.52 upon which net income he owed
to the United States an income tax of $43,392.22.
In instruction 13 the court
withdrew from the consideration of the jury paragraph numbered (2) in
each count of the indictment, supra, and submitted only the means
by which appellant was charged to have attempted to defeat and evade his
income taxes as charged in paragraph numbered (1) in each count thereof.
Section 145 of the Internal
Revenue Code, 26
U. S.
C. A. §145, so far as pertinent, is set out in footnote. 1
[Taxpayer's
Contentions]
The appellant's contentions
on appeal are:
1. That the evidence does
not support a conviction under §145(b) of the statute because (a) the
indictment fails to charge and the proof fails to establish any willful
commission in addition to the willful omission to file a return or to
pay a tax, (b) the offense of evasion of an income tax under §145(b)
can not be committed prior to the day on which the taxpayer is required
to file his return.
2. That the court erred in
the admission of expert testimony; and
3. That the instructions,
although not excepted to at the time they were given, are so indefinite,
uncertain, contradictory, misleading, inconsistent and prejudicial as to
require reversal on review.
[Proof
Required under Sec. 145(b)]
The theory of appellant's
first contention is that the indictment as it read after the court in
instruction 13 withdrew paragraph (2) of each count from the
consideration of the jury attempted to charge a violation of §145(b)
for each year in question by filing, and causing to be filed, a false
and fraudulent income tax return; that this was an insufficient
allegation as a matter of law to charge an offense under §145(b)
because the indictment as it then stood charged no more than an offense
under §145(a), and would not support a judgment under §145(b). In
other words, appellant could not be convicted under §145(b) without
issue and proof of the commission of some act in addition to the
willful omission to file a return which appellant claims is
declared to be a misdemeanor only under §145(a).
To support his theory thus
outlined appellant relies upon the decision of the Supreme Court in Spies
v. United States, 317 U. S. 492 [43-1 USTC ¶9243]. In this case
Spies was convicted of attempting to defeat and evade income tax in
violation of §145(b) of the Act by failure to make a return and pay a
tax although he had sufficient income during the year in question to
place him under a statutory duty to do so. The Supreme Court reversed.
The Court observed that §145(a) makes, among other things, willful
failure to pay a tax or make a return by one having sufficient income a
misdemeanor, and that §145(b) makes a willful attempt in any manner to
evade or defeat any tax by a taxpayer a felony. The Court held that
while a felony may include lesser offenses in combination either with
each other or with other elements, Congress by the felony defined in §145(b)
meant more than the same derelictions defined in §145(a) as a
misdemeanor. The Court summarized the analysis of the statute as
follows:
Congress did not define or
limit the methods by which a willful attempt to defeat and evade might
be accomplished and perhaps did not define lest its effort to do so
result in some unexpected limitation. Nor would we by definition
constrict the scope of the Congressional provision that it may be
accomplished "in any manner." By way of illustration, and not
by way of limitation, we would think affirmative willful attempt may be
inferred from conduct such as keeping a double set of books, making
false entries or alterations, or false invoices or documents,
destruction of books or records, concealment of assets or covering up
sources of income, handling of one's affairs to avoid making the records
usual in transactions of the kind, and any conduct, the likely effect of
which would be to mislead or to conceal. If the tax-evasion motive plays
any part in such conduct the offense may be made out even though the
conduct may also serve other purposes such as concealment of other
crime.
It is apparent that the Spies
case does not support appellant's theory. The indictment in this case
after the withdrawal of paragraph (2) of each count from the
consideration of the jury did not attempt to charge a felony under §145(b)
by failure to file a return or pay a tax or by the omission or
commission of any other dereliction defined as a misdemeanor in §145(a).
It charged an attempt to defeat and evade the tax by the positive act of
willfully filing a false and fraudulent return--not a mere failure to
file any return. The indictment charged that for the year 1943 appellant
filed a return showing an income of $8,455 and a tax due of $1,933.58,
whereas he received an income in that year of $55,256.60 on which a tax
in the amount of $30,843.69 should have been paid; and for the year 1944
he disclosed an income of only $788.04 and a tax of $8.64, whereas his
income was $69,959.62 on which a tax in the sum of $43,392.22 should
have been paid.
The distinction between the
offenses defined in §145(a) and §145(b) is too clear to permit
confusion. Section 145(a) denounces as a misdemeanor (1) willful
failure to pay a tax; (2) willful failure to make a return;
(3) willful failure to keep records; or (4) willful failure
to supply information. Section 145(b), on the other hand, denounces as a
felony a willful attempt "in any manner" to evade or
defeat any tax. As said by the Supreme Court in the Spies
case, supra, "Congress did not define or limit the methods
by which a willful attempt to defeat and evade might be accomplished and
perhaps did not define lest its efforts to do so result in some
unexpected limitation."
That the evidence justified
a finding by the jury that appellant's income tax returns filed by him
for the years 1943 and 1944 were deliberately false and fraudulent is
not controverted. The record shows that appellant when his income was
under investigation furnished to the Internal Revenue agents data
concerning his income for the years in question showing an income tax
due from him for many thousands of dollars in excess of the amount shown
on the returns which he filed. The government was not required to prove
more than that there was willfully unreported income to sustain a
conviction under §145(b). United States v. Johnson, 319
U. S.
503, 517, 518 [43-1 USTC ¶9470]; United States v. Ragen, 314
U. S.
513 [42-1 USTC ¶9186]; United States v.
Troy
, 293
U. S.
58 [35-1 USTC ¶9002]; Gleckman v. United States, 8 Cir., 80 Fed.
(2d) 394, 399 [35-2 USTC ¶9645], cert. den., 297
U. S.
709; Cooper v.
United States
, 8 Cir., 9 Fed. (2d) 216 [1 USTC ¶149]; Murray v. United
States, 8 Cir., 117 Fed. (2d) 40 [41-1 USTC ¶9247].
[When
Crime Committed]
Appellant further contends
that count 4 of the indictment is insufficient to sustain a conviction.
Count 4 alleges that appellant willfully attempted to defeat and evade a
large part of his 1944 income tax by filing and causing to be filed a
false and fraudulent return for that year on
the 15th of January, 1945
. Appellant argues that since the tax was not due until
March 15, 19
45
, there could be no criminal attempt to defeat or evade it prior to that
time, unless the government proved that it had not been paid up to and
including the time the indictment was returned.
The argument is fallacious.
A taxpayer whose returns are made on the basis of the calendar year may
file his return with the collector "on or before the 15th day of
March following the close of the calendar year", §53(1) Internal
Revenue Code, 26 U.S.C.A. §53(1); and the tax "shall be paid on
the 15th day of March following the close of the calendar year", §56(a);
and it "may be paid . . . prior to the date prescribed for its
payment", §56(d). The crime denounced by §145(b) of willfully
attempting to defeat or evade the tax is complete when the taxpayer
willfully and knowingly files a false and fraudulent return with intent
to defeat or evade any part of the tax due the
United States
. Guzik v.
United States
, 7 Cir., 54 Fed. (2d) 618, 619 [1931 CCH ¶9681], cert. den., 285
U. S.
545; Bowles v.
United States
, 4 Cir., 73 Fed. (2d) 772, 774 [1934 CCH ¶9546].
[Expert
Testimony]
Appellant next contends
that the court erred in admitting in evidence the testimony of
government witnesses Paul J. Powers and George J. Zimmerman, called as
expert witnesses to compute the income taxes of appellant for the years
involved. Both witnesses are Internal Revenue agents of several years'
experience. Powers had audited appellant's income tax returns and had
participated in the investigation of his income for the years in
question.
During the years here
involved the appellant's income was derived principally from the
operation of slot machines in Moose Lodge Club rooms in five
Iowa
cities and from the operation of a farm. He kept no books. Discovery of
his income required the checking of the books of the Moose Lodges where
his slot machines were operated, investigation of his farm and other
operations. The deductions allowed him for expenses consisted in large
part of his own estimates. The books of the lodges and of their auditors
and his bank accounts were introduced in evidence.
While an investigation of
appellant's tax returns by the government was in progress appellant and
the tax lawyer employed by him attended a conference with a
representative of the Intelligence Unit of the Bureau of Internal
Revenue. Thereafter, under date of
May 15, 19
45
, the tax lawyer filed with the Special Agent in charge of the
investigation a Statement, verified by appellant, which was introduced
in evidence without objection. The data disclosed in the statement,
identified as Exhibit 35, will sometimes be referred to hereinafter as
"admissions" by appellant. The exhibits consisting of copies
of the account books of the Moose Lodges, bank accounts, and the like,
together with appellant's admissions, showing in large part the income
of appellant for the taxable years in question were numbered from 1 to
44 inclusive.
Appellant's criticism of
the testimony of Powers and Zimmerman is that in computing his tax
liability for the years in question the witnesses took into
consideration some items of income not disclosed in the exhibits in
evidence. The exact amount of these items is not shown by cross
examination or otherwise. But both witnesses testified that their
calculations were based substantially on exhibits 1 to 44. Their
computations show, also, that the witnesses allowed deductions
substantially in excess of those claimed by appellant in his statement,
exhibit 35. Appellant did not testify, and introduced no testimony. The
witness Zimmerman in response to an hypothetical question based upon
appellant's admissions in exhibit 35 computed his tax liability for both
years for which he was convicted. We summarize the computations of the
two expert witnesses as follows:
Powers Zimmerman Admissions
1943
Gross income ..... $60,241.60 $60,061.60 $54,314.35
Deductions ....... 4,985.00 4,958.00 4,960.00
Net income ....... $65,256.60 $55,103.60 $49,354.35
Tax liability .... $30,843.69 $30,705.73 $26,379.48
1944
Gross income ..... $93,309.06 $92,987.52 $90,092.30
Deductions ....... 23,349.44 24,870.44 19,954.44
Net income ....... $69,959.62 $68,117.08 $70,137.86
Tax liability .... $43,392.22 $43,131.84 $43,536.50
A comparison of these
computations discloses that the tax computed by both witnesses for the
year 1944 was less than the tax computed by appellant's admissions.
The criticism of the expert
testimony is without merit. No exception was saved to the clear and
correct instruction of the court on the weight to be accorded the expert
testimony. In United States v. Johnson, 319 U. S. 503, 519 [43-1
USTC ¶9470], the Supreme Court held that the admission of testimony of
an expert witness regarding income and expenditures of one accused of
violating §145(b), consisting of computations based upon substantially
the entire evidence in the record, was not error, where all the issues,
as in tihs case, are left to the independent determination of the jury.
Further, the amount of the
tax which it was charged the appellant attempted to defeat and evade was
not of the gist of the offense, and the court so instructed in
substance. Gleckman v.
United States
, 8 Cir., 80 Fed. (2d) 394, 401 [35-2 USTC ¶9645]. It is not
necessary that the government prove an evasion of all the tax charged. Tinkoff
v.
United States
, 7 Cir., 86 Fed. (2d) 868, 878 [37-1 USTC ¶9057]; United States
v. Ragen, 314
U. S.
513, 526 [42-1 USTC ¶9186]; Rose v.
United States
, 10 Cir., 128 Fed. (2d) 622 [42-2 USTC ¶9500]; Wiggins v.
United States, 9 Cir., 64 Fed. (2d) 950 [1933 CCH ¶9299]; United
States v. Miro, 2 Cir., 60 Fed. (2d) 58 [1932 CCH ¶9396]. The
appellant was in no way prejudiced by the admission of the expert
testimony. The admitted excess of his income and of the tax due the
government over the amounts set out in his returns would support the
jury's finding that he willfully attempted to defeat and evade his taxes
by filing false and fraudulent returns. This is especially true when it
is remembered that although he did not keep books he knew that he had a
much larger income than he reported for tax purposes and that even
though he had forgotten the exact amount of his receipts means were
easily available to him to find out from the Moose Lodges the amounts
paid to him during the year as rental on his slot machines. In any event
the question was for the jury to determine.
[Instructions
of the Jury]
Finally, the appellant
complains that instructions 10, 11, 13, and 14 were so indefinite,
inconsistent and prejudicial as to require reversal, although no
exceptions were taken at the trial.
As indicated in the
assignment of error no exceptions to these instructions were saved by
appellant. Rule 30 of the Rules of Criminal Procedure, effective
March 21, 19
46, provides that "No party may assign as error any portion of the
charge or omission therefrom unless he objects thereto before the jury
retires to consider its verdict, stating distinctly the matter to which
he objects and the grounds of his objection." Notwithstanding this
rule, in criminal cases involving life or liberty of a defendant an
appellate court may notice plain and seriously prejudicial error in the
trial even though not assigned as error. Harper v.
United States
, 8 Cir., 143 Fed. (2d) 795, 803. Rarely, however, will a trial
court's judgment be reversed for failure to give instructions in the
absence of a seasonable request or exception, Yoffe v. United States,
1 Cir., 153 Fed. (2d) 570, 576 [46-1 USTC ¶9171]; Stassi v. United
States, 8 Cir., 50 Fed. (2d) 526, and then only if the failure to
instruct constitutes a basic and highly prejudicial error. Joyce v.
United States
, 8 Cir., 153 Fed. (2d) 364.
In the instant case we find
no prejudicial error in the instructions such as to require reversal or
extended consideration. Instructions 10 and 11 related to counts 3 and 4
of the indictment and charged the jury that the burden rested upon the
government to establish beyond a reasonable doubt the material
allegations of the indictment, enumerating them. These instructions are
correct. Gleckman v.
United States
, 8 Cir., 80 Fed. (2d) 394 [35-2 USTC ¶9645]; United States v.
Schenck, 2 Cir., 126 Fed. (2d) 702 [42-1 USTC ¶9363]; Guzik v.
United States, 7 Cir., 54 Fed. (2d) 618 [1931 CCH ¶9681].
Instruction 13 withdrew
paragraph (2) of each count of the indictment and as to the manner of
evading and defeating the tax submitted the case on paragraph (1)
thereof. Appellant again contends that by so doing the court submitted
only the question of violation of §145(a). We have discussed and
disposed of this criticism supra, in connection with the
discussion of appellant's first contention.
As to instruction 14,
appellant says the trial court therein advised the trial jury that
something more must be proven than had been submitted by it in
instructions 10 and 11. This contention arises from a misapprehension of
the meaning and application of the instruction and a failure to consider
the instructions as a whole. The instruction merely explains the measure
and quality of proof necessary to establish willfullness of the
appellant as that term is defined in instruction 7. It adds nothing to
the burden imposed upon the government in instructions 10 and 11. Even
if it did augment the burden resting upon the government in the trial of
the issues it is difficult to understand how the appellant was
prejudiced thereby. The proof in any event abundantly supports the
verdict of the jury.
For the foregoing reasons
the judgment appealed from is affirmed.
1
§145(a). Failure to file returns, submit information, or pay tax.
Any person required under this chapter to pay any estimated tax or tax,
or required by law or regulations made under authority thereof to make a
return or declaration, keep any records, or supply any information, for
the purposes of the computation, assessment, or collection of any
estimated tax or tax imposed by this chapter, who willfully fails to pay
such estimated tax or tax, make such return or declaration, keep such
records, or supply such information at the time or times required by law
or regulations, shall, * * * be guilty of a misdemeanor * * *
(b) Failure to collect
and pay over tax, or attempt to defeat or evade tax. Any person * *
* who willfully attempts in any manner to evade or defeat any tax
imposed by this chapter or the payment thereof, shall, . . . be guilty
of a felony * * *
[57-2
USTC ¶9971]Joseph J. Bodnar, Appellant v.
United States of America
, Appellee
(CA-6),
U. S. Court of Appeals, 6th Circuit, No. 13185, 248 F2d 481, 10/18/57,
Affirming unreported District Court decision
[1939 Code Sec. 1024(b)--similar to 1954 Code Sec. 7201]
Criminal proceedings: Wilful evasion of taxes: Admissibility in
evidence of cancelled checks drawn to cash, check stubs and schedules of
revenue agent.--In criminal proceedings for wilful evasion of taxes,
arising from the alleged failure of appellant taxpayer to report certain
cash payments from a company to which he sold corrugated waste paper,
the Court held that it was not improper to introduce in evidence certain
cancelled checks of the company which made the purchases drawn to cash,
together with its check stubs for the checks in question which bore
certain notations indicating payment to the taxpayer, as the checks did
not bear the endorsement of taxpayer, although they did tie in with the
check stubs, cash disbursement journal and settlement sheets and were
therefore a material link in the chain of circumstances. The Court also
held that the notations on the check stubs made by a third party
concerned the weight of the evidence but not their admissibility. The
Court likewise rejected the contention of the taxpayer that the
schedules of the internal revenue agent were erroneously received in
evidence because they were based on exhibits which were not in evidence.
Frank E. Steel, Steel &
Finley,
Akron
,
Ohio
, for appellant. Russell E. Ake, Assistant United States Attorney,
Cleveland, Ohio Sumner Canary, United States Attorney, G. W. Morrison,
Assistant United States Attorney, Cleveland, Ohio, on brief), for
appellee.
Before ALLEN, MARTIN and
MILLER, Circuit Judges.
PER CURIAM:
In a trial without a jury
the appellant was found guilty on two counts of an indictment charging
wilful evasion of income taxes for the years 1950 and 1951 and received
a sentence of one year on each count to be served concurrently.
The Government contended
that the appellant received cash payments from a company to which he
sold corrugated waste paper, which he did not report in his income tax
returns for the years in question.
The Government introduced
in evidence certain cancelled checks of the company which made the
purchases drawn to cash, which did not have the endorsement of the
appellant thereon, together with its check stubs for the checks in
question. The check stubs bore notations stating that all or a certain
portion of the proceeds was paid to the appellant, which amount in turn
was transcribed in the cash disbursement journal, also introduced in
evidence. It also introduced the company's settlement sheets which
tabulated and totaled the weight and amount to be paid therefor of
separate deliveries by the appellant. The checks and check stubs were
prepared as a result of these settlement sheets. In some instances the
settlement sheet carried a notation of the date of payment and the
number of the check. There was uncontradicted testimony that the
appellant asked that he be paid in cash and that in some instances the
amount called for by the settlement sheet was paid in cash to
appellant's driver. Some checks were payable to appellant and bore
appellant's name as an endorsement. Appellant, however, did not concede
that it was his signature. An agent of the Internal Revenue Service
testified that he examined the books of the appellant at his place of
business and with his consent, and introduced schedules prepared from
the information so obtained showing that the cash payments referred to
did not appear in the record books of the appellant and were not
included in his recorded and reported income.
Appellant contends that the
checks were improperly received in evidence in that they were payable to
cash and did not bear his endorsement. Considered apart from the other
evidence the contention would have merit. But when tied in with the
check stubs, cash disbursement journal and settlement sheets, they
become a material link in the chain of circumstances and in our opinion
were relevant to the issue.
These various exhibits were
admissible in evidence as records made in the regular course of business
under Section 1732, Title 28,
U. S.
Code; Landay v.
United States
, 108 Fed. (2d) 698, 704, C. A. 6th;
United States
v. Brewster, 231 Fed. (2d) 213, C. A. 2nd [56-1 USTC ¶9399]; United
States v. Potson, 171 Fed. (2d) 495, 499, C. A. 7th [49-1 USTC ¶9119];
United States v. Leathers, 135 Fed. (2d) 507, 510, C. A. 2nd.
Appellant's contention that he should not be bound by notations on the
check stubs made by a third party concerns the weight of the evidence.
The statute provides that such circumstances may be shown to affect its
weight but shall not affect its admissibility.
Appellant's contention that
the schedules of the Internal Revenue Agent were erroneously received in
evidence because they were based on exhibits which were not in evidence
is also rejected. Lisansky v.
United States
, 31 Fed. (2d) 846, 850, C. A. 4th [1929 CCH D-9277]; Paschen v.
United States
, 70 Fed. (2d) 491, 501, C. A. 7th [1937 CCH ¶9234]; McKnight v.
United States, 115 Fed. 972, 981, C. A. 6th. See:
United States
v. Mortimer, 118 Fed. (2d) 266, 269, C. A. 2nd.
We are of the opinion that
the judgment is fully supported by the evidence, and it is accordingly
affirmed.
[57-1 USTC ¶9242]Madeline V. Smith,
Appellant v.
United States of America
, Appellee
(CA-6),
U. S. Court of Appeals, 6th Circuit, No. 12897, 239 F2d 168, 12/12/56,
Affirming an unreported District Court opinion
[1939 Code Sec. 145(a)--similar to 1954 Code Sec. 7203]
Tax fraud: Evidence: Charts explaining Revenue Agent's
computations.--In a criminal proceeding against a taxpayer for
willful evasion of tax, it was not error to admit in evidence charts
showing a Special Agent's computation of the taxpayer's income. The jury
was instructed that the charts were offered merely to explain the
witness's testimony.
David Hanover,
Memphis
,
Tenn.
(
Hanover
,
Hanover
, Hanover & Walsh,
Memphis
,
Tenn.
, on briefs), for appellant. Millsaps Fitzhugh, United States Attorney,
Memphis, Tenn. (Charles K. Rice, Washington, D. C., and Edward N. Vaden
and Robert E. Joyner, Memphis, Tenn., were with him on briefs), for
appellee.
Before SIMONS, Chief Judge,
and ALLEN and MILLER, Circuit Judges.
PER CURIAM:
In this case appellant was
indicted for willful evasion of income tax in her returns for the
calendar years 1949 and 1950, found guilty by the jury, and duly
sentenced by the court.
Appellant's principal
contention is that the court committed reversible error in admitting as
evidence the computation of income which appeared upon certain charts
used by a Special Agent with the Intelligence Division of the Internal
Revenue Service to explain his testimony. The court properly instructed
the jury with reference to these charts, that they were offered merely
in explanation of the witness's testimony and his computations, and that
it was for the jury to say "whether there is competent evidence in
the record to support the figures as shown on these charts." The
admission of such tabulations as an aid to the jury does not constitute
reversible error. It has been approved by this court in recent cases of
income tax evasion. In Gariepy v.
United States
, 189 Fed. (2d) 459, 462 (C. A. 6) [51-1 USTC ¶9318], the court
declared that the computation was at best "but an estimate, but as
an estimate it was entitled to the consideration of the jury because
based on substantially the entire evidence in the record." Cf. Eggleton
v.
United States of America
, 227 Fed. (2d) 493 (C. A. 6) [56-1 USTC ¶9108]; American
Vitrified Products Company v. Wyer and Hansen, 221 Fed. (2d) 447 (C.
A. 6). The use of such calculations was approved by the Supreme Court in
United States v. Johnson, 319 U. S. 503, 519 [43-1 USTC ¶9470].
The record shows that within the holding of the Johnson case the
trial court herein left the jury "free to exercise its untrammeled
judgment upon the worth and weight" of the evidence given in these
charts.
The trial was fair. It was
shown by overwhelming evidence that appellant had made substantial
understatements of her income for the years in question. No reversible
error appears in the record and it is ordered that the judgment of the
District Court be and it hereby is affirmed.
[55-1 USTC ¶9508]Maurice D. Scanlon,
Defendant, Appellant v.
United States of America
, Appellee
(CA-1),
In the United States Court of Appeals for the First Circuit, No. 4877,
223 F2d 382,
June 13, 19
55
Appeal from the United States District Court for the District of New
Hampshire.
[All issues: 1939 Code Sec. 145(b)--substantially unchanged in 1954 Code
Sec. 7201]
Criminal prosecution: Admissibility of evidence: Net worth statement
procured by revenue agent.--A net worth statement signed and sworn
to by defendant at the request of a revenue agent but without coercion
or trickery on the agent's part was admissible, even though defendant
was not warned that his tax liability was being investigated.
Criminal prosecution: Defendant's right to inspect pre-trial
statements: Accountant's report in Government's possession.--Defendant's
counsel had no right to inspect a report made by an accountant who had
prepared defendant's returns, which was in the Government's possession
and was referred to by the accountant while testifying as the
Government's witness, since the witness stated that his testimony was
not different from what was contained in his report and defendant did
not otherwise prove that the accountant had signed a statement competent
to contradict his oral testimony.
Criminal prosecution: Failure to instruct jury.--The trial court
allowed the Government to introduce an affidavit of a witness for the
purpose of impeaching him and also for the purpose of showing the truth
of the statements contained therein. A general objection was made by
defendant's counsel, which was overruled. Failure of the trial court to
instruct the jury that the affidavit was not to be utilized as
substantive evidence was harmless error, since the entire payment made
to the witness by defendant which was sought to be included as an
expenditure amounted to slightly over 10% of defendant's unreported net
income as alleged by the Government.
Criminal prosecution: Admissibility of evidence: Summaries copied
from records of corporate successor.--A special agent testified from
summaries which were introduced as evidence purporting to be copied from
the records of the corporate successor to defendant's sole
proprietorship. The Government maintained that the value of the assets
of the successor was properly included in defendant's net worth
statement. Defendant contended that the summaries were constructed from
the books of the corporate successor with which he had no connection and
that therefore the summaries were inadmissible hearsay. The
Appeals Court
agreed with the Government that since the original records of the
proprietorship were unavailable, the summaries were admissible as
secondary evidence.
Criminal prosecution: Net worth method: Inclusion of wife's bank
accounts in defendant's net worth.--Defendant urged that the
Government improperly attributed his wife's bank accounts to him and
included them in its estimate of his net worth. The Appeals Court held
that failure on the part of the Government to investigate this lead
would require acquittal had the Government's case turned upon the
increase in net worth revealed in the bank accounts, but the
Government's other evidence was sufficient to convict since the increase
in the bank account amounted to about 13% of the alleged unreported
income.
Criminal prosecution: Net worth method: Cash basis taxpayer:
Liabilities not includible in net worth.--Defendant contended that
the Government's proof of net worth of his investment in the sole
proprietorship did not include liabilities of the enterprise. The
Appeals Court
held that it was not improper to exclude accounts receivable and
accounts payable since both the defendant and the proprietorship used
cash basis accounting and inclusion of these items in the net worth of
the current year would not accurately reflect defendant's income for
that year.
Criminal prosecution: Net worth method: Likely source of income:
Gambling activities.--Defendant was a bookie and kept no records of
income from his bookmaking operations. It was not necessary for the
Government to prove by direct evidence the extent of defendant's income
from bookmaking since the jury could reasonably find that the bookmaking
was a likely source for defendant's increases in net worth.
Criminal prosecution: Admissibility of evidence: Opinion evidence:
Testimony of special agent.--A special agent testified that on a
certain day he showed defendant that according to the Government's net
worth figures it was obvious that there was unreported income. After
objection by defendant that this was opinion evidence, the trial court
did not abuse discretion in admitting the special agent's statement on
the ground that it was a statement made to defendant and that as such it
was not an inadmissible opinion of a witness on an issue to be decided
by the jury.
Criminal prosecution: Admissibility of evidence: Government's net
worth statement and tax computation.--There was no abuse of
discretion by the trial court in admitting the Government's net worth
statement and tax computation since both were merely summaries of
evidence that had been offered by the Government and could have been
disbelieved by the jury in whole or in part.
Criminal prosecution: Net worth method: Sufficiency of evidence.--Defendant
contended that the Government did not provide sufficient evidence for
the jury to infer with reasonable certainty that the Government's net
worth figure as of
December 31, 1946
, was accurate representation of his net worth on that date. The
contention was dismissed on the ground that there was a net worth
statement signed by defendant himself and prepared by his accountant as
well as other admissions made by him to the special agent during the
course of investigations.
Criminal prosecution: Government's comments on defendant's
nonpresentation of witnesses.--The Government's comments on
defendant's failure to bring in witnesses who could testify as to giving
or loaning to defendant such sums of money as would justify defendant's
net worth increases resulted in no prejudicial error.
Criminal prosecution: Instructions to jury.--Defendant had
objected to the trial court's instruction that if defendant's net worth
statement was voluntarily given the jury must consider its contends.
This instruction is not objectionable because the jury was to consider
the contents of that statement and the weight to be given to them only
if they dicided the statement was obtained voluntarily. Defendant had
also objected to the instruction: "The prosecution in this case has
taken
December 31, 1946
, as a base or starting point and has determined the amount of the
excess of his assets over his liabilities at that time. This constitutes
his net worth as of that date." Upon defendant's objection the
trial judge further charged the jury on this point in an attempt to
correct any misunderstanding. In the opinion of the
Appeals Court
the jury should have understood from the amended instruction that it was
their duty to determine whether or not defendant's net worth was
substantially identical to the Government's figure.
Stanley M. Brown (McLane,
Carleton, Graf, Greene & Brown,
Manchester
, N. H., was with him on brief), for defendant, appellant. Maurice P.
Bois, United States Attorney (Burton L. Williams, Trial Attorney,
Internal Revenue Service, Boston, Mass., was with him on brief), for
appellee.
Before MAGRUDER, Chief
Judge, and WOODBURY and HARTIGAN, Circuit Judges.
Opinion
of the Court
HARTIGAN, Circuit Judge:
This is an appeal from a
judgment of the United States District Court for the District of New
Hampshire entered
April 14, 19
54, sentencing the defendant to imprisonment for a period of fifteen
months on each of two counts of an indictment for violations of §145(b)
of the Internal Revenue Code of 1939, *
said prison sentences to run concurrently, and to a fine of $2,500.00 on
each count. The first count of the indictment refers to an individual
return for calendar year 1947 and the second count to a joint return for
calendar year 1948. The trial was before a jury, and, following the
Government's presentation of its case, which was based on the net worth
and expenditures method, the defendant moved to strike certain evidence
and for judgment of acquittal. Both motions were denied. The defendant
chose not to present any evidence following the denial of these motions.
The defendant bases his
appeal on several grounds. We shall deal first with his objections to
the admission of certain evidence during the course of the trial.
[Defendant's
Net Worth Statement]
Prior to the trial the
defendant unsuccessfully sought to have suppressed a net worth statement
signed and sworn to by him on
August 20, 19
52
. He later objected to its admission during the trial on the same
grounds as were advanced by him at the hearing on the motion. It seems
from the record of the hearing on the defendant's motion to suppress
evidence, which is somewhat confusing on this point, that the defendant
was not warned during the pre-trial investigation that any statements
made by him might be used against him. This net worth statement was
signed at the request of Edward M. Vytal, an Internal Revenue agent, but
there is no evidence that there was any duress, coercion, fraud or
trickery employed by the Government in obtaining it and the trial court
so found.
The defendant has cited two
cases as recognizing a duty imposed on the Government to warn a person
whose taxes are being investigated of his right against
self-incrimination. However, in the first of these cases, Montgomery
v. United States, 203 Fed. (2d) 887 (5 Cir. 1953) [53-1 USTC ¶9336],
although the court reversed the conviction of the appellant because of
certain errors in the conduct of the trial, it held that even though a
Special Agent of the Government testified that no warning at any time
was given to the appellant that a Government exhibit based upon
statements and admissions made to the Special Agent by the appellant and
documents surrendered to the Special Agent by the appellant were
admissible. The court further held that such documents were admissible
as evidence themselves, stating at p. 893: "We do not think that
the circumstances under which the statements of the defendant and of his
wife, and the cancelled checks and documents, were obtained were
sufficient of themselves to require that that evidence be excluded on
the ground of being involuntary as a matter of law, or to require that
the Government's Exhibit No. 20 based in part upon such testimony be not
admitted in evidence. All of those circumstances were matters which went
to the weight or credibility of the testimony thus obtained. * * *"
It is to be noted that in the Montgomery case a Special Agent
obtained the questioned documents but that in the instant case it was a
Revenue Agent, Vytal, who procured the defendant's signature on the net
worth statement. From the testimony before us it appears that a Special
Agent at least in some cases carries on the investigation originally
begun by a Revenue Agent. It is not improbable that in the
Montgomery
case the questioned documents were obtained at a stage of the
investigation much nearer to actual criminal prosecution than in the
instant case.
The second case cited by
the defendant in support of his contention that the net worth statement
was inadmissible is United State v. Guerrina, 112 Fed. Supp. 126
(E. D. Pa. 1953) [53-1 USTC ¶9369], which held that certain evidence
sought to be used by the Government in a prosecution for income tax
evasion should be suppressed. This evidence had been obtained
voluntarily from the defendant by a Special Agent who at the time of the
investigation "* * * had reason to believe that the defendant had
been guilty of fraud and that his purpose in making the examination of
his papers was to obtain evidence for contemplated criminal
prosecution.", id. p. 130, and who did not warn the defendant of
his constitutional right to decline to produce these incriminating
documents. However, upon reargument of the motion to suppress, Judge
Clary in United States v. Guerrina, 126 Fed. Supp. 609 (E. D. Pa.
1955) [55-1 USTC ¶9143], admitted that his earlier opinion with respect
to the evidence voluntarily produced by the defendant was erroneous and
that such evidence was admissible, stating at p. 610 "The import of
the decisions in the Burdick and Montgomery cases * * * is
that failure to warn the defendants of their constitutional rights
before questioning them as to their potential tax liability does not per
se and as a matter of law render their admissions involuntary. The
circumstances of the investigation and the failure to warn the
defendants of their constitutional rights were matters which went only
to the weight and credibility of the evidence thus obtained and not to
its admissibility." We hold that the trial judge in the instant
case did not err in denying the defendant's motion to suppress his net
worth statement and that his denial was in accord with the weight of
judicial opinion.
United States
v. Burdick, 214 Fed. (2d) 768 (3 Cir. 1954) [54-2 USTC ¶9475]
vacated and remanded 348
U. S.
905 (1955) [55-1 USTC ¶9139]; Hanson v. United States, 186 Fed.
(2d) 61 (8 Cir. 1950) [51-1 USTC ¶9118]; United States v. Wolrich,
119 Fed. Supp. 538 (S. D. N. Y. 1954) [54-1 USTC ¶9276].
[Accountant's
Report]
The defendant contends that
his counsel should have been allowed to inspect a document referred to
in the testimony of the Government's witness, Edward S. Samara, an
accountant who had prepared the defendant's tax returns for 1947 and
1948. The particular document sought to be inspected by defendant's
counsel was a report in the Government's possession signed by Samara and
which he had reexamined in the United States Attorney's office before
testifying. Samara stated that as far as he could recollect, his
testimony on the witness stand was not different from that contained in
the report. The defendant's contention that the trial court committed
error in its refusal to order production of the document is based on United
States v. Krulewitch, 145 Fed. (2d) 76 (2 Cir. 1944). In that case
the principal Government witness had signed a written statement for an
agent of the Federal Bureau of Investigation which completely exculpated
the accused. The court said at p. 78: "During the course of her
cross-examination, the accused's counsel, who has apparently learned of
this paper, demanded the privilege of inspecting it with a view to
cross-examining her upon it and presumably of putting it in evidence to
impeach her." Apparently, despite the trial court's refusal to
allow accused's counsel to inspect the document, the principal
Government witness upon cross-examination swore that the statement she
had given the Government was false throughout. Thus, the competence of
the document to contradict the testimony of this witness was clear and
the defendant had properly laid a foundation for the inspection of this
statement. The court appears to imply that inspection may be proper if
the competence of the document to impeach the witness is apparent
without inspection as otherwise the defendant could not ask those
questions which are necessary for admission of the statement itself. In
the Krulewitch case the defendant had already established that
the Government's witness has made a prior contradictory statement. Once
this was established the defendant had a right to inspect the statement.
In the instant case, however, the defendant did not prove that Samara
had signed a statement competent to contradict his oral testimony. In
United States
v. Remington, 191 Fed. (2d) 246 (2 Cir. 1951), cert. denied 343
U. S. 907 (1952), it is again implied that it is necessary that it first
be established that the pre-trial statement is inconsistent with the
witness' present testimony before such statement will be made available
to the defense. In Gordon v. United States, 344 U. S. 414 (1953),
Justice Jackson clearly expresses certain principles to be followed by
the trial court in determining whether the defense shall be given the
right to inspect pre-trial statements made by Government witnesses. It
is clear that the defense must lay a foundation before the court must
order the production of documents. In the Gordon case this
requirement had been met for it was expressly stated at p. 418 that
"By proper cross-examination, defense counsel laid a foundation for
his demand by showing that the documents were in existence, were in
possession of the Government, were made by the Government's witness
under examination, were contradictory of his present testimony, and that
the contradiction was as to relevant, important and material matters
which directly bore on the main issue being tried: the participation of
the accused in the crime." In the instant case there is no evidence
that Samara's pre-trial statement was inconsistent in any respect with
his trial testimony and, therefore, there is no evidence that it
contained contradictions on relevant, important and material matters
bearing on the defendant's guilt or innocence.
The defendant maintains
that he did everything possible to establish a foundation which would
require the production of Samara's statement but that he could not show
inconsistencies unless he had the document itself to compare with
Samara's oral testimony. But if we hold that the trial court must
require the production of such documents which the defendant alleges
could be used not only to attack the credibility of the witness but also
to establish the truth of the facts included in the statement, if
inconsistent with the witness' oral testimony, without any preliminary
showing of competence to impeach, it is not at all unlikely that this
would lead to frequent fruitless and time wasting "fishing
expeditions" on the part of the defense. The defense is not without
protection against the possibility of not being able to utilize
pre-trial contradictory statements for if it is able to establish that
the Government witness has given contradictory written statements on
relevant matters to the Government as was done in the Krulewitch
case, it has a right to inspect such statements.
[Tuttle's
Affidavit]
The defendant further
contends that the trial court committed reversible error when it allowed
the Government to introduce an affidavit signed by the witness Tuttle,
for the purpose not only of impeaching Tuttle but also for the purpose
of showing the truth of the statements contained therein. The decision
of the trial court if it allowed this affidavit as substantive evidence
was erroneous. Bridges v. Wixon, 326
U. S.
135 (1945). However, defendant's counsel did not state the ground of his
objection and there is considerable authority holding that if a general
objection, as was made here, is overruled, such general objection cannot
avail the defendant upon appeal if that evidence was admissible for any
purpose. Bucher v. Krause, 200 Fed. (2d) 576 (7 Cir. 1952), cert.
denied 345
U. S.
997 (1953), rehearing denied 346
U. S.
842; 1 Wigmore, Evidence §18 (3rd ed. 1940). Moreover, the trial judge
was under the impression that Tuttle's affidavit was admitted "on
the basis of his credibility" and not as affirmative evidence of
the statements contained therein. We note that the defendant did not
request instruction from the court on the purpose of which the jury
could consider Tuttle's affidavit. It is doubtful that the failure of
the trial court to make entirely clear that the affidavit was not to be
utilized as substantive evidence was anything more than a harmless error
which did not affect the substantial rights of the defendant. Fed. R.
Crim. P. 52(a). The entire payment made to Tuttle by the defendant which
was sought to be included as an expenditure in 1948 was $2,696.24,
whereas the Government alleged that the defendant's unreported net
income in 1948 was $23,466.22. If we decrease the latter amount by
$2,696.24 there would be left $20,769.98 in expenditures and increase in
net worth in 1948, which the jury could find t be attributable to
unreported 1948 income. See United States v. Costello (2 Cir.
April 5, 19
55
) [55-1 USTC ¶9342].
[Testimony
From Summaries]
The defendant further
contends that the Government's main witness, Roger Charpentier, a
Special Agent with the Intelligence Division of the Bureau of Internal
Revenue, was erroneously allowed to testify from summaries, which were
introduced as evidence purporting to be copied from the records of the
J. Scanlon and Company. This company was a crane operating enterprise
which the Government sought to prove was wholly owned by the defendant.
The Government maintains that the value of its assets was rightfully
included in the defendant's net worth statement. Evidence was presented
which tended to prove that these assets consisted of two cranes, a
truck, a welding machine and tools and that these assets had been
purchased by the defendant in 1947 and 1948. This enterprise was
conducted as an individual proprietorship until
March 7, 1949
when it was incorporated as J. Scanlon and Company, Incorporated. It
appears that the records copied were the records of the corporate
successor to the defendant's individual proprietorship. There was
testimony to the effect that the only records kept for J. Scanlon and
Company in 1947 and 1948 when it was owned by the defendant were a check
book and pay roll record. Charpentier testified that his summary which
purported to show the accounts receivable and accounts payable of J.
Scanlon and Company on January 1, 1949 and also the existence of a tool
asset item was copied from a "combination journal, ledger and cash
receipt and cash disbursement record." Although the president of J.
Scanlon and Company, Incorporated, brought all the records which he
possessed relating to the company both in 1947 and 1948 when the company
was owned by the defendant and in 1949 when the company was
incorporated, Charpentier testified that these records did not include
the journal entries from which he prepared his summaries. The essence of
the defendant's challenge to the admissibility of Charpentier's
summaries is that they were reconstructed from the books of a corporate
successor of the defendant's individual proprietorship with which
corporation the defendant had no connection and that therefore the
corporate books or any summary of them were inadmissible hearsay. The
Government's theory is that the corporate records were relevant and as
they were not in the possession of J. Scanlon and Company, Inc.,
therefore they could logically only be in the possession of the
defendant, who had denied the existence of such records, and under the
authority of Lisansky v. United States, 31 Fed. (2d) 846 (4 Cir.
1929) [1929 CCH D-9277], cert. denied 279
U. S.
873, Charpentier's summaries as secondary evidence were then admissible.
The Government established to the satisfaction of the trial judge that
the original records were destroyed, mislaid or otherwise unavailable
and that Charpentier's summaries were admissible as secondary evidence.
We agree with the Government in this regard and assuming the original
records were competent evidence, then under the circumstances the
secondary evidence of these records was properly admissible. Whether or
not the original records from which Charpentier copied his summaries
were relevant to the issue of the defendant's income in 1948 is the
primary question that must have been considered by the trial court in
deciding whether the summaries were admissible. There is no doubt that
the earliest date on which the particular entry as to these asset and
liability items could have been made was
January 1, 1949
. It could also be inferred by the jury that these entries were made in
March, 1949 when the assets formerly owned by the defendant were
acquired by J. Scanlon and Company, Inc. However, the jury could have
found that the defendant very well could have had an interest in the
corporation in 1949 when the assets and liabilities were entered in the
corporate records, as Cowette, president of J. Scanlon and Company,
Inc., testified that the defendant had not had any interest in the
business since January, 1951 which would certainly not negative the
probability that the defendant did have such an interest in 1949.
Moreover, Charpentier testified that the defendant admitted that he had
withdrawn from the business in 1951. The value given to assets and
liabilities on January 1, 1949, including the tool asset item, by a
corporation in which the defendant had an interest and which purchased
the defendant's assets in March, 1949 does have some rational probative
value as to the extent of the defendant's net worth on December 31,
1948. It was the function of the jury to determine how much weight it
would give this evidence and the court did not err in admitting it for
consideration by the jury.
[Wife's
Bank Accounts]
Another point urged by the
defendant is that this case must be reversed because of the
insufficiency of proof relating to the defendant's wife's two banking
accounts which were claimed by the Government to be wholly attributable
to the defendant and thus includible in the Government's estimate of his
net worth. It is argued that the defendant on
March 2, 19
53
told Charpentier, the Internal Revenue Special Agent, that $2,900 or
$3,000 of the money in one of his wife's banking accounts had belonged
to her father and this money had been returned to her father in 1950 or
1951. While under cross-examination Charpentier testified that he had
not checked further on this item other than asking the defendant for
further information which was not forth-coming. The Special Agent also
testified that the defendant had gone over every item in a later
conference and that he had not objected to the apparent inclusion of his
wife's bank accounts. However, the agent testified that he could have
"easily found out" in what years the money had been deposited
but had not done so because "It appeared at the time that the money
in question related to later years * * *." The defendant contends
that this case should not have gone to the jury because the evidence
relating to these bank accounts was insufficient to meet the standards
laid down by the Supreme Court in Holland v. United States, 348
U. S. 121 (1954) [54-2 USTC ¶9714]. In that case the Court said at pp.
135, 136:
"* * * When the
Government rests its case solely on the approximations and
circumstantial inferences of a net worth computation, the cogency of its
proof depends upon its effective negation of reasonable explanations by
the taxpayer inconsistent with guilt. Such refutation might fail when
the Government does not track down relevant leads furnished by the
taxpayer--leads reasonably susceptible of being checked, which, if true,
would establish the taxpayer's innocence. When the Government fails to
show an investigation into the validity of such leads, the trial judge
may consider them as true and the Government's case insufficient to go
to the jury. This should aid in forestalling unjust prosecutions, and
have the practical advantage of eliminating the dilemma, especially
serious in this type of case, of the accused's being forced by the risk
of an adverse verdict to come forward to substantiate leads which he had
previously furnished the Government. It is a procedure entirely
consistent with the position long espoused by the Government, that its
duty is not to convict but to see that justice is done."
In view of the fact that a
bank account of the defendant's wife increased from $1,624.32 to
$5,336.35 in 1948, which would indicate a deposit of over $3,000 in that
year, thus supporting the defendant's explanation, the Government's
failure to investigate this lead would require acquittal of the
defendant if the Government's case turned upon the increase in net worth
revealed in this bank account. However, the defendant's explanation
would account for only $3,000 of a totalled alleged unreported net
income in 1948 of $23,466.22. Thus, even if this lead were assumed to be
true, the Government's evidence was sufficient to convict. See
United States
v. Costello, supra.
[Company's
Liabilities]
The defendant further
contends that the Government's proof of the net worth of the defendant's
investment in J. Scanlon and Company consisted of the value of the
depreciable assets of J. Scanlon and Company only both in 1947 and 1948
and did not include the liabilities of that enterprise and therefore
such net worth figure did not accurately reflect the true value of the
defendant's investment. This contention would at first seem plausible
for it is obvious that the value of one's investment in an enterprise is
certainly affected by the extent of the liabilities of that enterprise.
That is to say, if the defendant had purchased $50,000 worth of
equipment and had contributed this to an enterprise solely owned by him
and, assuming no other assets were purchased and that this enterprise
had in some manner incurred a liability of $50,000, it would seem
grossly illogical to say that the value of the defendant's enterprise
was still $50,000. The Government maintains, however, that as the
defendant and J. Scanlon and Company were both on the so-called cash
basis accounting, which does not recognize liabilities that have not
resulted in the payment of cash by the taxpayer, to recognize such
liabilities would produce a net worth figure that would not accurately
reflect the defendant's income picture during the current year but would
rather take into account in the current year a loss that would be taken
advantage of, insofar as taxes are concerned, in the following year.
Thus, in the example above, assuming the $50,000 liability was an
account payable which had been incurred in 1948 but was not paid until
1949, the defendant's income tax return for 1948, because he and his
company were on a cash basis, would not reveal the existence of the
$50,000 account payable but his 1949 return would reflect the cash
payment of $50,000.
This court agrees that it
is not improper to exclude from such net worth estimate such items as
accounts receivable and accounts payable, which are not attributable to
the defendant's current income (income being that income which is
reportable by a taxpayer on a cash basis). However, if the Government
does exclude all non-cash items such as accounts payable and accounts
receivable it must not include in its net worth figure any assets which
were purchased by means of accounts payable or any other non-cash
liability account. For example, the value of a house purchased by means
of a still outstanding loan could not be included in the net worth
statement unless it was set off by the balance of the loan still owing.
Similarly, if the defendant here had obtained certain materials for his
crane business through accounts payable which were still unpaid at the
end of the tax year in question, the value of such material could not
appear in the closing net worth figure for that year unless offset by
the balance of the accounts payable.
In the instant case the
Government offered evidence from which the jury could infer that the
principal assets of J. Scanlon and Company were purchased with cash and
that this cash was obtained neither through accounts payable, loans
outstanding or any other non-income source. For example, a bank official
testified that the defendant had purchased a bank check for $19,335
which was apparently made up of a withdrawal of $1335 from the
defendant's bank account plus an unknown credit from another source; and
this bank check was endorsed by a corporation from which the defendant
purchased a crane for J. Scanlon and Company for $21,435. The Government
also provided evidence tending to prove that the only outstanding loan
to J. Scanlon and Company which it had been able to find was that of a
local bank in the amount of $10,000, and this loan was reflected in the
Government's estimate of the defendant's net worth. The Government also
provided evidence that J. Scanlon and Company's accounts payable
amounted to $4,030.08, as of January 1, 1949, which would indicate that
no great prejudice could have been suffered by the defendant through the
Government's failure to offset this $4,030.08 item, which it had
discovered itself through investigation of the records of J. Scanlon and
Company, against the value of a crane costing twenty-four thousand
dollars purchased by the defendant in 1948 along with a truck and
welding equipment. Moreover, there was no suggestion by the defendant
that the purchase in 1948 of these assets was made possible though the
establishment of an account payable of about only four thousand dollars.
The record does not reveal any other lead given to the Government by the
defendant which could possibly explain how these assets were obtained
other than through cash attributable to current income and "* * *
where relevant leads are not forthcoming, the Government is not required
to negate every possible source of nontaxable income, a matter
peculiarly within the knowledge of the defendant." Holland v.
United States, supra, at 138.
[Income
From Gambling]
The defendant contends that
the Government should have offered evidence from which it could be found
that his income from his gambling activities exceeded his reported
income before the allegedly prejudicial fact that he was a bookie was
made known to the jury. This contention does not warrant lengthy
discussion. In
United States
v.
Holland
, supra, at pp. 137, 138, it was said "Increases in net worth,
standing alone, cannot be assumed to be attributable to currently
taxable income. But proof of a likely source, from which the jury could
reasonably find that the net worth increases sprang, is
sufficient." Here it was shown that the defendant was a bookie and
that he kept no records to show income from his bookmaking operations
although the defendant had reported income from gambling operations. The
Government also produced evidence tending to prove that the defendant
was a bookie in other to make a large profit and not "for just a
week's pay." The proving by direct evidence of the extent of the
defendant's income from bookmaking was not necessary in this case so
long as the jury could reasonably find that it was a likely source from
which the defendant's increases in net worth arose.
The defendant contends that
Special Agent Charpentier's testimony was improperly admitted.
Charpentier testified in direct examination that on
February 24, 19
53
, he "showed Mr. Scanlon that according to the net worth statement
prepared by Mr. Burnett, and also according to figures we were
preparing, that it was abvious that there was unreported income."
After objection by defendant that this was opinion evidence the trial
court allowed the answer on the ground it was a statement made to the
defendant and that as such it was not an inadmissible opinion of a
witness on an issue to be decided by the jury. See 7 Wigmore, Evidence
§1969(2), (3rd ed. 1940). We are of the opinion that the admission of
this testimony was not an abuse of discretion on the part of the trial
court.
The defendant's objection
to Charpentier's statement that proper accounting on a cash basis would
not consider accounts payable or receivable is without substantial merit
as Charpentier was in this instance properly acting as an expert on
income tax matters. United States v. Johnson, 319
U. S.
503 (1943) [43-1 USTC ¶9470], United States v.
Caserta
, 199 Fed. (2d) 905 (3 Cir. 1952) [52-2 USTC ¶9540]. The admission
in evidence near the close of the trial of two Government exhibits, one
being a net worth statement and the other a tax computation was not an
abuse of discretion by the trial judge as both were merely summaries of
evidence that had been properly offered by the Government and could have
been disbelieved by the jury in whole or in part. Defendant was free to
present his own evidence and summaries if he wished to rebut this
evidence. Hanson v. United States, supra.
Defendant's further
contention that the trial court was guilty of improper conduct in that
it demanded that the defendant produce certain documents does not
warrant discussion especially when these alleged demands are viewed in
the context of the entire record.
The defendant further
contends that the Government did not provide sufficient evidence for the
jury to infer with reasonable certainty that the Government's beginning
net worth figure of $28,599.77 as of
December 31, 19
46
was an accurate representation of the defendant's actual net worth on
that date. Defendant relies on Bryan v. United States, 175 Fed.
(2d) 223 (5 Cir. 1949) [49-1 USTC ¶9322], affirmed 338
U. S.
552 (1950) [50-1 USTC ¶9140] but the evidence presented in that case
was certainly weaker than was presented by the Government in the instant
case. In the
Bryan
case there was no admission by the defendant as to the extent of his
beginning net worth. See Pollock v.
United States
, 202 Fed. (2d) 281, 284 (5 Cir. 1953) [53-1 USTC ¶9229], cert.
denied 345
U. S.
993. In the instant case there was properly admitted in evidence a net
worth statement signed and sworn to by the defendant and prepared by the
defendant's accountant which stated his beginning net worth was
$26,262.22. It is to be noted that the net worth figure finally relied
upon by the Government was $28,599.77 or $2,337.55 more than the
defendant's own estimate of his net worth. Other admissions made by the
defendant during the course of the investigation by Special Agent
Charpentier supply additional evidence from which the jury could infer
that all of the defendant's assets as of
December 31, 19
46 were reflected in the Government's $28,599.77 net worth figure.
[Government's
Arguments to Jury]
The defendant cntends that
certain portions of the Government's argument to the jury were so
prejudicial as to entitle the defendant to acquittal. With regard to the
interest of Bernard Cowette in J. Scanlon and Company and the
Government's allegedly prejudicial remark with reference thereto, the
Government counsel was merely presenting to the jury his conception of a
reasonable deduction to be made from Cowette's testimony. See Keal
Driveway Co. v. Car & General Ins. Corporation, 145 Fed. (2d)
345 (5 Cir. 1944). Defendant's contention that Government counsel failed
to completely discuss the capital gains and losses provision of the
Internal Revenue Code is without merit. The remarks concerning the
source of defendant's income were withdrawn after objection and do not
constitute prejudicial error.
The defendant also objected
to that portion of the Government's counsel's argument to the jury which
is as follows:
"I submit to you,
ladies and gentlemen of the jury, that although, as Mr. Graf points out,
the defendant does not have to take the stand, and a jury is not
entitled to make any inference from that, if there were that information
available, if in fact somebody had given Mr. Scanlon ten thousand
dollars in 1946 or 1947 or 1948, they could have brought him in for you.
But did you see any evidence of it? No."
The
Government argues that this comment was allowable on two grounds. One
ground appears to be that the defendant's counsel had already discussed
the subject of the defendant not having to testify and that consequently
the Government could be allowed to comment on the defendant's
nonpresentation of witnesses. The Government cites as authority for this
point United States v. Feinberg, 140 Fed. (2d) 592 (2 Cir. 1944),
cert. denied 322
U. S.
726, and Myres v. United States, 174 Fed. (2d) 329 (8 Cir. 1949)
[49-1 USTC ¶9275], cert. denied 338 U. S. 849, but these cases
presented situations unlike that presented in the instant case and do
not stand as authority for the Government's contention. In the instant
case defendant's counsel did not attempt to indicate what the defendant
would have said if he had testified and thus did not create an
opportunity for the prosecution to comment upon the defendant's lack of
evidence. The other ground of the propriety of Government's counsel's
comment is that it is allowable to comment on the failure of the
defendant to bring in a witness who could testify as to giving or
loaning the defendant such sums of money as would justify the
defendant's net worth increases. In Graves v. United States, 150
U. S. 118 (1893), the Supreme Court, although reversing a conviction
because of prejudicial comment by the district attorney, stated at p.
121: "The rule even in criminal cases is that if a party has it
peculiarly within his power to produce witnesses whose testimony would
elucidate the transaction, the fact that he does not do it creates the
presumption that the testimony if produced would be unfavorable."
This rule has been generally followed and consequently comments on the
non-production of evidence which is peculiarly within the control of the
other party have been allowed. 88 C. J. S. Trial §184;
Chesapeake
& O. Ry. Co. v. Richardson, 116 Fed. (2d) 860 (6 Cir. 1941),
cert. denied 313
U. S.
574; Milton v. United States, 110 Fed. (2d) 556 (D. C. Cir.
1940); see Bell v. United States, 185 Fed. (2d) 302, 309 (4 Cir.
1951) [50-2 USTC ¶9499], cert. denied 340
U. S.
930. In the instant case the testimony of any person who had made a gift
or loan to the defendant would certainly be evidence peculiarly within
the control of the defendant and consequently the allowance of the
prosecution's comment did not result in prejudicial error.
[Trial Court's Charge]
The defendant's final
contentions deal with the trial court's charge. This charge adequately
instructs the jury as to placing on the Government the burden of proving
the defendant's guilt beyond a reasonable doubt and also made clear to
the jury that the fact of the defendant's indictment was not to be
considered as evidence of guilt. Objection was made to the trial court's
instruction that if the defendant's net worth statement was voluntarily
given, the jury must consider its contents. This instruction, however,
did not invade the province of the jury for only if the jury decided the
statement was obtained voluntarily was it to consider the contents of
that statement and the weight to be given to the contents was left
entirely to the judgment of the jury.
The main objection of the
defendant is to the trial court's instruction with regard to the
defendant's net worth on
December 31, 19
46
. It is contended that the trial court in effect made what amounted to a
finding of fact on this issue when it stated: "The prosecution in
this case has taken
December 31, 19
46
, as a base or starting point and has determined the amount of the
excess of his assets over his liabilities at that time. This constitutes
his net worth as of that date." However, when this was objected to
by the defendant the trial judge attempted to correct any
misunderstanding on the part of the jury by further charging the jury on
this point. In our opinion the jury should have understood from this
amounded instruction that it was their function to determine whether or
not the defendant's net worth was substantially identical to the
Government's figure.
The judgment of the
district court is affirmed.
*
26 U. S. C. §145(b) (1946), 53 Stat. 62 (1939)
"§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."
[47-1
USTC ¶9286]Alex Steinberg, Appellant, v.
United States of America
, Appellee
(CA-5),
United States Circuit Court of Appeals for the Fifth Circuit, No. 11793,
162 F2d 120,
June 12, 19
47, Cert. denied, 332 U. S. 808, 68 S. Ct. 108
Appeal from the District Court of the United States for the North
District of Texas.
Penalties: Evidence: Admissibility.--On the evidence, taxpayer's
conviction of wilfully attempting to evade and defeat his income and
victory taxes for 1943 by filing false and fraudulent tax returns, and
wilfully subscribing said false returns not believing them to be true,
is affirmed. Affirming an unreported decision of the District Court.
George Gordon Battle and
Francis L. Kohlman, New York, N. Y., John A. Erhard, Dallas, Texas, and
Eugene Meacham, Washington, D. C., for appellant. William P. Fonville,
Assistant U. S. Attorney, Dallas, Texas, and Robert B. Young, Jr., U. S.
Attorney, Fort Worth, Texas, for appellee.
Before SIBLEY MCCORD, and
LEE, Circuit Judges.
SIBLEY, Circuit Judge:
Alex Steinberg was tried,
convicted and sentenced on an indictment in four counts which charged
him as to his own income from the calendar year 1943, and that of his
wife in community, with wilfully attempting to evade and defeat their
income and victory taxes by filing false and fraudulent tax returns and
concealing the true income and taxes contrary to Internal Revenue Code
§145(b); and with wilfully subscribing said false tax returns not
believing them to be true, contrary to Internal Revenue Code §145(c).
Forty-three errors were specified on taking appeal, but only a few of
them are now insisted on, they being urged as errors in themselves, and
as showing that the trial as a whole was not fair and impartial. To
understand them a brief outline of the evidence is made.
[The
Facts]
Steinberg since 1933 was a
broker in whiskies, and held in 1943 permits from the State of
Texas
to do that business, and to represent certain out-of-State distilleries.
In 1943 he began under some arrangement to deal for or with Robert
Gould, who controlled several distilleries and bottling plants; and
Steinberg was given office space in
Cincinnati
,
Ohio
, in Gould's offices there. Steinberg in 1943 is shown to have handled
whisky sales, in barrels and bottles, running above two million dollars,
in about three-fourths of which Gould was concerned. Whisky was scarce,
and almost any price could be obtained for it. In April, 1943, ceiling
prices were fixed by OPA. The prices obtained by Steinberg were far
above the ceiling prices. Usually the distillery or bottling plant was
paid ceiling price by check or on its draft, and the excess price was
separately paid to Steinberg, in whose name the sales were made, by
checks which he indorsed and collected, or in cash. More than a million
dollars were thus traced into his hands. He testified that he had only a
commission, or a "finder's fee" in them, acting otherwise for
the sellers or buyers, and had no interest in the excess prices. He
testified that in the Gould transactions Gould insisted that this excess
over what was collected by the distilleries or other sellers be paid
over to him in cash only, and was so paid, some being paid in person and
some sent by registered mail and express in greatly under-valued
packages. The distilleries' books showed only the ceiling prices charged
and collected by them, and other lawful expenses, such as taxes and
bottling charges. No regular book record was kept by Gould or Steinberg
of the excess prices, and Gould gave him no receipts; Steinberg and the
purchasers, however, had the sales contracts from which the full prices
could be ascertained, and the checks and drafts also showed what was
paid.
Steinberg's records, made
by himself, showed fully and accurately his transactions in business
other than in whisky, his travel and other expenses, and his commissions
on strictly commission sales. He had a record also of
"brokerage" earnings, put into the tax return under that name,
in which most of the whisky sales were represented, and in which
earnings beyond ordinary commissions were entered which he described as
"finder's fees," that is, compensation for finding whisky for
a purchaser or a purchaser for the seller. It is this item of the
returns about which the controversy turns, the prosecution contending
that the income thus received was many times that reported and not mere
fees, but a share in or the whole of the excess price paid for the
whisky both in the Gould transactions and in others, and that the income
was thus grossly understated, and taxes evaded on each return in an
amount exceeding $400,000.
It was also shown that in
November, 1944, Gould was indicted for selling whisky above ceiling
prices; and he sent for Steinberg, and gave him in cash some $292,000,
in addition to $60,000 which he had just previously sent, and induced
him to return the aggregate of some $352,000 as income earned by
Steinberg in sales in 1943, but not realized till 1944, which returns
Steinberg made. Gould was convicted on his trial, though he testified
that he had received no excess sales money. Government investigators
testified in the present case against Steinberg that in 1946 he had
stated to them in his counsel's presence that he had with Gould a rough
50-50 split arrangement during 1943 and that what Gould turned over to
him in November, 1944, was about Steinberg's part under that
arrangement. Steinberg has since filed claim for refund for the heavy
taxes he paid on this money under his 1944 returns.
[Issues]
The crucial questions for
the jury were the credibility as a witness of Steinberg, and of Gould,
who was offered as a witness by the defense, but who testified as he had
in his own trial, that Steinberg had never paid him any excess sales
money, nor had he given Steinberg the $352,000 in November, 1944; and
the credibility of Steinberg as to his true interest in the sales which
were not Gould transactions. There was some circumstantial corroboration
of Steinberg to his paying Gould cash money. There was much testimony
and documentary evidence of the large sums that went into Steinberg's
hands from the whisky sales.
[Propriety
of Argument]
1. It is urged that
language used in argument by prosecuting counsel requires a new trial,
though no motion for a mistrial was made, and no objection offered or
ruling invoked save in one instance. In that instance, the defendant
having put his general character in issue, counsel was discussing that
evidence and said: "Is he a law abiding citizen? Let us look at the
evidence in this case. He testified to you under oath that constantly
for nearly a year he engaged in the largest black market operation of
which you probably ever heard, making nearly a million dollars, at a
time when this nation was in a splendid effort to avoid the catastrophe
of wild inflation, in a situation where demand far exceeded supply and
the price of whisky was just a small part of the whole; here is a man
who cynically from the stand tells you he has violated the federal law
every day for nearly a year, and would have the temerity to introduce
witnesses to say he has the reputation for being a law abiding
citizen." Objection was made that the defendant had not cynically
admitted from the witness stand that he had violated the law every day
during 1943. The court said, "Well, that is a deduction of counsel.
We will just let the jury weigh it." The defendant had testified to
his numerous acts in aiding Gould to sell whisky at what he knew were
over-ceiling prices, to lending his own name, collecting the money, and
paying it over to Gould in cash. He had said he had no concern in the
price, whether over-ceiling or not. Counsel, in view of the federal law
that all who aid and abet another in crime are principals, was justified
in arguing as he did that Steinberg was on his own testimony guilty
along with Gould, and that it was cynical to testify to these facts and
disclaim any moral or legal responsibility. The statement that Steinberg
violated the law every day was an exaggeration, but perhaps an allowable
inference. The court did not err in his ruling that the matter was to be
weighed by the jury.
Other criticisms of the
prosecution's speeches are not supported even by objection. The speeches
are reported in full, and appear to us to be logical and not
inflammatory, and not exceeding in vigor what the nature of the case
authorized.
[Propriety
of Taxation]
2. Unfairness is attributed
to the district attorney in asking Steinberg, "As a matter of fact
you did not have your defense until your Washington lawyers got down
here and got ready to try this case, did you?" No objection was
made and the witness answered quietly, "You are absolutely mistaken
in that." The question was asked after the witness had said that
his tax attorneys in
Washington
had advised him to ask refund of the 1944 tax, and that he was not going
to give it back to Gould. He had said the $352,000 so taxed belonged to
the persons who had paid it as over-ceiling price. This newly advanced
idea of refund to them seems to be the defense meant. The question
caused no excitement at the time and should not now.
[Counsel
in Contempt of Court]
3. Error is assigned in the
finding for contempt of the
Washington
counsel, which though not in the presence of the jury is argued to have
been known to them, and to have disconcerted the counsel. It occurred
thus. The counsel wished to prove that certain investigating agents of
the government, apparently investigating Gould, had said to Steinberg,
"We know you did not get the money. We want you to tell us about
Gould." The court ruled the evidence not binding on the
United States
as an admission. There was then an effort to show that a microphone had
been placed in Steinberg's hotel room, probably by these agents. The
judge said, "We are going to warn counsel now not to seek to inject
something indirectly that the court has ruled inadmissible; if you do so
you do it under the court's warning." The finding of the microphone
was then related by the witness, with wires leading to an adjoining
room. The witness was asked who had occupied that room. On objection,
the court said, "If he has got anything in here he ought to have,
and the government has been guilty of wrongdoing, we might as well know
it, and if not we might as well understand counsel is seeking unethical
procedure." The jury was sent out and the court said: "All
right the bars are down and the gate is open; bring out all you have in
mind, counsel." The matter of the microphone was pursued, but
without showing that anything affecting Steinberg's case was learned
therefrom. Then the witness was again asked about the agents' saying,
"We know that you did not get the money and we know that Gould got
it." The court asked counsel on what theory of law this was
admissible. Counsel argued (the jury being still absent) that in such
matters agents' reports were the basis of government action, and that
the finding of the microphone was the cause of Steinberg's refusal to
make further statements to the agents. The court, quietly but with his
mind evidently on the agents' statement which he had previously ruled
out, reprimanded the counsel and fined him $50 for contempt of court,
expressing the opinion that "A lawyer of your ability could
scarcely be in good faith in asking these questions." The jury was
recalled and the case proceeded without further reference to the
incident until the close of the evidence several days later when, the
jury again being absent, the court of his own motion remitted the fine.
For counsel intentionally to try to get before the jury evidence which
the court has ruled out may well be a contempt in some circumstances,
but here the jury was absent and the court invited counsel to go fully
into the matter, and to state his theory of admissibility. There was no
contempt of the former ruling, but only a doing of what the count
invited. But this erroneous dealing with the counsel in the absence of
the jury was not error in the trial. We cannot assume, as we are asked
to do, that the jury learned of it and were unduly affected by it. Nor
is there anything to show that counsel was by the injustice done him
disabled in any way from doing his duty. It appears in the record that
he is a retired naval captain, who has practiced law since 1915, and has
served in the judge advocate's office in the Navy and as a penal trial
attorney for the Bureau of Internal Revenue for five years. His
sensibilities ought not to be unusually delicate. He made no claim to be
disconcerted. He continued to conduct the trial with his accustomed
vigor and skill.
[Hostility
of the Court]
4. The defendant offered to
prove in addition to a good character in general and for honesty and
accuracy in business, that he was charitable. This trait was ruled out
as not relevant to the case. In so ruling the court said, "I think
in a certain book, Gone With the Wind, one of the most charitable
persons in there was of bad reputation otherwise." On objection to
the remark, the court told the jury he intended no personal application
to Steinberg and to disregard it. The remark was out of place, but we
think it was cured by its withdrawal. The ruling on the evidence offered
was correct.
Other things are brought
forward as showing hostility by the judge. These rulings as such were
not erroneous. The report of the trial shows the judge ruling for one
side about as often as the other. We are not impressed that there was
any general hostility to the defendant or his counsel.
[Refusal
of Court to Call Witness]
5. Robert Gould was present
at the trial. The prosecution having rested, it announced that it would
not use him as a witness. Defendant's counsel asked the court to call
him as the court's witness. The court recognized the right to do so, but
said he did not at the present stage feel called on to do it. The
counsel for defendant then said, "We will call Robert Gould."
The jury was retired on request, and it was made known by the district
attorney that Gould had before the grand jury claimed his constitutional
privilege against self-incrimination and refused to testify; he
suggested that the court in the absence of the jury ascertain what
questions were to be asked and whether the privilege covered them.
Defense counsel desired that it all be done in the jury's presence. The
court held that Gould should be allowed to claim his privilege in the
jury's presence, but that the court would see presently how far the
privilege might protect against the questions to be asked. This was
done. The counsel for Gould who was present then arose and stated he had
previously advised Gould to claim his privilege, but he would now like
to advise him to answer any question which the court orders him to
answer. The jury then returned. Gould answered all questions asked him
without making any claim of privilege at all, denying that Steinberg had
paid him any of the over-ceiling price money as Steinberg claimed. The
defense was allowed to impeach him by proof that he had nevertheless
been convicted and sentenced for forty-eight OPA violations in liquor
sales.
We have recognized the
right of the court in a criminal trial to examine an important witness
whom neither side would vouch for, allowing both sides the privilege of
cross-examination and impeachment. See Young v.
United States
, 107 Fed. (2d) 490. But it is a matter in the discretion of the
court to do or not to do. There was no error in refusing. The defendant
then voluntarily called this witness, apparently expecting that he would
in the jury's presence refuse to testify on the ground that it would
tend to incriminate him, affording an inference that he had received the
over-ceiling price money. We do not, however, say that such an inference
would be allowable. The witness testified just as he was known to have
done in his own trial before another court. There was thus no
entrapment, and impeachment was perhaps not really the right of the
party calling him, but it was allowed. The disappointment of the defense
at the conduct of the witness generates no error in the court's refusal
to call him as the court's witness.
[Corroborative
Evidence Irrelevant]
6. Steinberg testified that
Gould would take no checks but required cash for the over-ceiling money,
and would give no receipts for it. Evidence was offered to corroborate
him by showing by five or six other persons who at about this time had
paid Gould over-ceiling prices for whisky that he dealt the same way
with them. The court held that if Gould were on trial such similar
transactions could be proved to show a plan or to illustrate Gould's
intent and system; but with Steinberg on trial for a different offense
Gould's dealings with others were res inter alios acta, and
irrelevant. The evidence offered did not go to the extent that Gould had
a rule or uniform practice of business, but only that he had required
cash of those customers. There may have been others who were dealt with
otherwise. An endless enquiry might be opened up. For the purpose for
which it was offered, we think the evidence not relevant.
[Opinion
of Counsel]
7. As to the $352,000 which
Steinberg testified Gould gave him in the fall of 1944 and requested him
to return it as Steinberg's income earned in 1943 but not returnable
then because subject to be reclaimed as over-ceiling money, evidence was
allowed that Steinberg's own counsel advised him that this would be
proper, but evidence was rejected that a counsel of Gould also so
advised him. The distinction the court took was that a man might rely on
what his own counsel advised him, but not on what another's counsel
said. All this advice was given many months after the returns for 1943
had been made and sworn to, and could have no bearing on the good faith
or belief in which they were made. It would bear only on the 1944
returns if they had been the basis of the prosecution. Whether
over-ceiling money ought as a matter of law to be returned in the year
it passed into the taxpayer's hands as his own, or whether because it
might be reclaimed by the payer or the Administrator it is to be
considered like embezzled funds which are not gain at all, is a question
of law and not of ex post facto advice. The court could have been
called on to decide it, if important to this case. We find no error in
ruling out the opinion of Gould's lawyer expressed in November, 1944.
[Court's
Noncompliance with R. C. P. 30]
8. The defendant's counsel
submitted to the judge some written requests for instructions to the
jury. The judge did not inform him of his proposed action on them prior
to the argument to the jury as required by Rule of Criminal Procedure
30. The record shows no request by counsel for this information, but
that the requests were mentioned only after the charge and in connection
with exceptions to their not having been given. There was an effort to
have the record corrected to show a request for information before
argument, but the judge did not remember any request and said he would
have responded if asked, and that in fact he marked them all refused
except as covered by the charge; and he refused to certify to any
request. That we accept as final. The substance of most of the requests
indeed appears in the charge. Some ought not to have been given. No
argument is made as to error in refusing any, though a general
specification of error was made in taking the appeal. None of them seems
to us to be of a sort that would have affected the argument if it had
been known that it would not be given. The irregularity in the judge's
omitting to say before the argument what would be done about the
requests does not seem to us to be error in the absence of a request to
know. If error, it is here of an inconsequential sort and ought not to
set aside the trial.
[Conclusion]
There is abundant evidence
to justify the verdict. Since we find no reversible error in the trial,
the judgment is affirmed.
[57-1
USTC ¶9356]
Orlando
Delli Paoli, Petitioner v.
United States of America
Supreme
Court of the United States, No. 33, October Term, 1956, 352 US 232, 77
SCt 294, 1/14/57
On writ of certiorari to the United States Court of Appeals for the
Second Circuit.
[1939 Code Sec. 145--similar to 1954 Code Secs. 7201-7203]
Tax evasion: Admissibility of a post-conspiracy confession of a
co-conspirator.--The petitioner and four co-defendants were tried
jointly for conspiring to evade payment of federal taxes on alcohol. At
the close of the Government's case, it offered the written confession of
one co-conspirator, made after termination of the conspiracy. The court
instructed the jury that the confession was to be considered only in
determining the guilt or innocence of the confessor, and not in
determining the guilt of any other defendant. All of the defendants were
convicted. The Supreme Court held that there was no error in admitting
the post-conspiracy confession. The instructions to the jury were
sufficiently clear to provide the petitioner with adequate protection
against use of the confession against him. The evidence was sufficient
for the jury to find, beyond a reasonable doubt, that the petitioner
participated in the conspiracy.
Four dissents.
Daniel H. Greenberg,
350 Fifth Ave.
,
New York
, N. Y., for petitioner. J. Lee Rankin, Solicitor General, Washington,
D. C., for the
United States
.
JUSTICE BURTON delivered
the opinion of the Court:
A joint trial in this case
resulted in the conviction of five co-defendants on a federal charge of
conspiring to deal unlawfully in alcohol. Only the petitioner, Orlando
Delli Paoli, appealed. The principal issue is whether the trial court
committed reversible error, as against petitioner, by admitting in
evidence a confession of a co-defendant, made after the termination of
the alleged conspiracy. The trial court declined to delete references to
petitioner from the confession but stated clearly that the confession
was to be considered only in determining the guilt of the confessor and
not that of other defendants. For the reasons hereafter stated, we agree
that, under the circumstances of this case, such a restricted admission
of the confession did not constitute reversible error.
In the United States
District Court for the Southern District of New York, the jury convicted
petitioner and four to-defendants, Margiasso, Pierro, Whitley and King,
of conspiring to possess and transport alcohol in unstamped containers
and to evade payment of federal taxes on the alcohol. 1
The Government's witnesses testified that they had observed actions of
the defendants which disclosed the procedure through which Margiasso,
Pierro and petitioner supplied unstamped alcohol to their customers,
such as King and Whitley. The Government also offered, for use against
Whitley alone, his written confession made in the presence of a
Government agent and of his own counsel after the termination of the
conspiracy. 2
The court postponed the introduction of Whitley's confession until the
close of the Government's case. At that time, the court admitted it with
an emphatic warning that it was to be considered solely in determining
the guilt of Whitley and not in determining the guilt of any other
defendant. The court repeated this admonition in its charge to the jury.
The Court of Appeals
affirmed petitioner's conviction, with one judge dissenting. 229 Fed.
(2d) 319. We granted certiorari especially to consider the admissibility
of Whitley's post-conspiracy confession. 350
U. S.
992.
[Sufficiency
of Evidence]
I. Petitioner first attacks
the sufficiency of the evidence connecting him with the conspiracy. The
Government's evidence, exclusive of Whitley's confession, showed that
the defendants' conspiracy to deal in unstamped alcohol centered around
a garage used for storage purposes in a residential district of the
Bronx in
New York City
and a gasoline service station, also in the
Bronx
. The service station was used by Margiasso, Pierro and petitioner as a
place to meet customers and transfer alcohol.
In December 1949,
petitioner, using the alias of "Bobbie London," was associated
with Margiasso and Pierro in inspecting the garage and in negotiating
for its purchase. For $2,000 in cash, title to the garage and an
adjacent cottage was taken in the name of Pierro's sister. In 1950, the
garage was repaired, its windows boarded up and its doors strengthened
and padlocked. Petitioner lived not far away, in the
Bronx
, and was observed, from time to time, at the garage or using a panel
truck which was registered under a false name. During the daytime, this
truck generally was parked near petitioner's home or the garage but
neighbors testified that it was in use late at night. In it petitioner
transported various articles to the garage or elsewhere. On one
occasion, petitioner, with Margiasso, loaded it with bundles of cartons
suited to the packing of 5-gallon cans. Late in 1951, petitioner used an
additional truck, also registered under a false name. In addition, he
frequently drove to the service station in a Cadillac car. On
December 18, 19
51
, he used this car in making delivery of a large package to a nearby
bar.
During December 1951, the
service station often was used as a meeting place for Margiasso, Pierro
and petitioner. Margiasso and petitioner were there on the evening of
December 28. 3
At about 7 and 10 p. m., respectively, King and Whitley arrived. Each
turned over his car to Margiasso. Margiasso drove King's car to the
garage and returned with it heavily loaded. King then drove it away.
Government agents followed him until he stopped in
Harlem
. There they arrested him and took possession of 19 5-gallon cans of
unstamped alcohol found in his car. Later in the evening, Margiasso took
Whitley's car to the garage and was arrested in it when leaving the
still-open garage. The agents thereupon seized 113 5-gallon cans of
unstamped alcohol they found in the garage. Whitley, who had been
waiting for Margiasso at the service station with $1,000 in a paper bag,
was arrested on the agents' return with Margiasso.
Petitioner's presence at
the service station on the evening of December 28 was closely related to
these events. He waited there with King for Margiasso to return with
King's car containing the 19 cans of alcohol. He was there again with
Margiasso at about 10 p. m. but left shortly before Whitley came. He
returned while Margiasso, Whitley and the agents were there and was
arrested while attempting to drive away.
Petitioner contends that
the above evidence shows merely that he was a friend and associate of
Pierro and Margiasso. We conclude, however, from the record as a whole,
that the jury could find, beyond a reasonable doubt, that petitioner was
associated with Pierro and Margiasso in the purchase of the garage and
the use of the panel truck, that he knew that unstamped alcohol was
stored in the garage, that he had access to it and that he was an active
participant in the transfers of alcohol to Whitley and King.
Accordingly, we agree with Circuit Judge Learned Hand's statement made
for the court below, following his own summary of the evidence of
petitioner's participation in the conspiracy:
"Not only was all this enough to connect
him with the business, but the jurors could hardly have failed to find
that he was in the enterprise. The whole business was illegal and
carried on surreptitiously; and the possibility that unless he were a
party to the venture, Pierro and Margiasso would have associated [with]
him to the extent we have mentioned is too remote for serious
discussion." 229 Fed. (2d) at 320. 4
[Admissibility
of Confession]
II. In considering the
admissibility of the Whitley confession, we start with the premise that
the other evidence against petitioner was sufficient to sustain his
conviction. If Whitley's confession had included no reference to
petitioner's participation in the conspiracy, its admission would not
have been open to petitioner's objection. Similarly, if the trial court
had deleted from the confession all references to petitioner's
connection with the conspiracy, the admission of the remainder would not
have been objectionable. The impracticality of such deletion was,
however, agreed to by both the trial court and the entire court below
and cannot well be controverted.
This Court long has held
that a declaration made by one conspirator, in furtherance of a
conspiracy and prior to its termination, may be used against the other
conspirators. However, when such a declaration is made by a conspirator after
the termination of the conspiracy, it may be used only against the
declarant and under appropriate instructions to the jury.
". . . Declarations of
one conspirator may be used against the other conspirator not present on
the theory that the declarant is the agent of the other, and the
admissions of one are admissible against both under a standard exception
to the hearsay rule applicable to the statements of a party. Clune v.
United States
, 159
U. S.
590, 593. See
United States
v. Gooding, 12 Wheat. 460, 468-470. But such declaration can be
used against the co-conspirator only when made in furtherance of the
conspiracy. Fiswick v.
United States
, 329
U. S.
211, 217; Logan v.
United States
, 144
U. S.
263, 308-309. There can be no furtherance of a conspiracy that has
ended. Therefore, the declarations of a conspirator do not bind the
co-conspirator if made after the conspiracy has ended. That is the
teaching of Krulewitch v.
United States
, supra [336
U. S.
440], and Fiswick v.
United States
, supra. Those cases dealt only with declarations of one conspirator
after the conspiracy had ended. . . .
"Relevant declarations
or admissions of a conspirator made in the absence of the
co-conspirator, and not in furtherance of the conspiracy, may be
admissible in a trial for conspiracy as against the declarant to prove
the declarant's participation therein. The court must be careful
at the time of the admission and by its instructions to make it clear
that the evidence is limited as against the declarant only. Therefore,
when the trial court admits against all of the conspirators a relevant
declaration of one of the conspirators after the conspiracy has ended,
without limiting it to the declarant, it violates the rule laid down in Krulewitch.
Such declaration is inadmissible as to all but the declarant. . . .
". . . These
declarations [i. e., those admissible only as to the declarant]
must be carefully and clearly limited by the court at the time of their
admission and the jury instructed as to such declarations and the
limitations put upon them. Even then, in most instances of a conspiracy
trial of several persons together, the application of the rule places a
heavy burden upon the jurors to keep in mind the admission of certain
declarations and to whom they have been restricted and in some instances
for what specific purpose. While these difficulties have been pointed
out in several cases, e.g., Krulewitch v. United States, supra,
at 453 (concurring opinion); Blumenthal v. United States, 332 U.
S. 539, 559-560; Nash v. United States, 54 Fed. (2d) 1006,
1006-1007, the rule has nonetheless been applied. Blumenthal v.
United States supra; Nash v. United States, supra; United States v.
Gottfried, 165 Fed. (2d) 360, 367." Lutwak v.
United States
, 344
U. S.
604, 617-618, 619. See also, Opper v. United States, 348
U. S.
84, 95.
Petitioner contends that Krulewitch
v. United States, 336
U. S.
440, requires the exclusion of a post-conspiracy confession of a
co-conspirator. That case dealt with the scope of the co-conspirators'
exception to the hearsay rule. This Court held that the utterance of a
co-conspirator made after the termination of the conspiracy was
inadmissible against other co-conspirators. Unlike the instant case, the
declarant was not on trial and the question whether his utterance,
implicating other alleged conspirators, could be admitted in a joint
trial solely against the declarant, under proper limiting instructions,
was neither presented nor decided.
The issue here is whether,
under all the circumstances, the court's instructions to the jury
provided petitioner with sufficient protection so that the admission of
Whitley's confession, strictly limited to use against Whitley,
constituted reversible error. The determination of this issue turns on
whether the instructions were sufficiently clear and whether it was
reasonably possible for the jury to follow them. 5
[Jury
Instructions]
When the confession was
admitted in evidence, the trial court said:
"The proof of the
Government has now been completed except for the testimony of the
witness Greenberg as to the alleged statement or affidavit of the
defendant Whitley. This affidavit or admission will be considered by you
solely in connection with your determination of the guilt or innocence
of the defendant Whitley. It is not to be considered as proof in
connection with the guilt or innocence of any of the other defendants.
"The reason for this
distinction is this: An admission by defendant after his arrest of
participation in alleged crime may be considered as evidence by the jury
against him, together with other evidence, because it is, as the law
describes it, an admission against interest which a person ordinarily
would not make. However, if such defendant after his arrest implicates
other defendants in such an admission it is not evidence against those
defendants because as to them it is nothing more than hearsay
evidence."
The
substance of this admonition was repeated several times during the
cross-examination of one of the government agents before whom the
confession was made and a final warning to the same effect was included
in the court's charge to the jury. 6
Nothing could have been more clear than these limiting instructions.
Petitioner, who made no objection to these instructions at the trial,
concedes their clarity.
We may also fairly proceed
on the basis that the jury followed these instructions. Several factors
favor this conclusion: (1) The conspiracy was so simple in its character
that the part of each defendant in it was easily understood. There was
no mass trial and no multiplicity of evidentiary restrictions. (2) The
separate interests of each defendant were emphasized throughout the
trial. Margiasso and petitioner were represented by one attorney. Each
of the other defendants was represented by a separate attorney.
Throughout the trial, the separate interests of each defendant were
repeatedly emphasized by his attorney and recognized by the court. 7
A separate trial never was requested on behalf of any defendant. (3) The
trial court postponed the introduction of Whitley's confession until the
rest of the Government's case was in, thus making it easier for the jury
to consider the confession separately from the other testimony. This
separation was pointed out by the trial court. Neither side thereafter
introduced any evidence. (4) In the main, Whitley's confession merely
corroborated what the Government already had established. In the light
of the Government's uncontradicted testimony implicating petitioner in
the conspiracy, the references to petitioner in the confession were
largely cumulative. (5) There is nothing in the record indicating that
the jury was confused or that it failed to follow the court's
instructions.
It is a basic premise of
our jury system that the court states the law to the jury and that the
jury applies that law to the facts as the jury finds them. Unless we
proceed on the basis that the jury will follow the court's instructions
where those instructions are clear and the circumstances are such that
the jury can reasonably be expected to follow them, the jury system
makes little sense. Based on faith that the jury will endeavor to follow
the court's instructions, our system of jury trial has produced one of
the most valuable and practical mechanisms in human experience for
dispensing substantial justice.
"To say that the jury might have been
confused amounts to nothing more than an unfounded speculation that the
jurors disregarded clear instructions of the court in arriving at their
verdict. Our theory of trial relies upon the ability of a jury to follow
instructions. There is nothing in this record to call for reversal
because of any confusion or injustice arising from the joint trial. The
record contains substantial competent evidence upon which the jury could
find petitioner guilty." Opper v.
United States
, 348
U. S.
84, 95. See also, Lutwak v. United States, 344 U. S. 604,
615-620; Blumenthal v. United States, 332 U. S. 539, 552-553.
There may be practical
limitations to the circumstances under which a jury should be left to
follow instructions but this case does not present them. As a practical
matter, the choice here was between separate trials and a joint trial in
which the confession would be admitted under appropriate instructions.
Such a choice turns on the circumstances of the particular case and lies
largely within the discretion of the trial judge. Accordingly, we
conclude that leaving petitioner's case to the jury under the
instructions here given was not reversible error and the judgment of the
Court of Appeals is affirmed.
1
In violation of 18
U. S.
C. §371, and I. R. C., 1939, §§ 2803(a), 2806(e), and 2913. Margiasso
and King were also indicted and convicted for the substantive crime of
possession of 19 5-gallon cans of unstamped alcohol, and Margiasso of
another 113 of such cans.
2
The confession appears as an appendix to the dissenting opinion below in
229 Fed. (2d) at 324-326. It is also printed as an appendix to this
opinion, post, p. --.
3
On that occasion, the procedure followed closely the pattern observed by
government agents on December 18 when, at 9 p. m., Margiasso and
petitioner had been at the service station. A
Pontiac
car, with two occupants, drove up. The occupants got out. Margiasso
drove away in their car and, half an hour later, returned with it
heavily loaded. When the two men drove it away, government agents tried
to follow it. However, they lost it in traffic and no arrests were made.
The agents noted the car's license number, found it registered under a
false name, and, on December 28, recognized it as the one in which
Whitley then came to the service station.
4
Participation in a criminal conspiracy may be shown by circumstantial as
well as direct evidence. See, e.g., Blumenthal v. United States,
332 U. S. 539, 557; Glasser v. United States, 315 U. S. 60, 80; Direct
Sales Co. v. United States, 319 U. S. 703; United States v.
Manton, 107 Fed. (2d) 834, 839.
5
For long-standing recognition that possible prejudice against other
defendants may be overcome by clear instructions limiting the jury's
consideration of a post-conspiracy declaration solely to the
determination of the guilt of the declarant, see also, Cwach v.
United States, 212 Fed. (2d) 520, 526-527;
United States
v. Simone, 205 Fed. (2d) 480, 483-484; Metcalf v.
United States
, 195 Fed. (2d) 213, 217;
United States
v. Leviton, 193 Fed. (2d) 848, 855-856;
United States
v. Gottfried, 165 Fed. (2d) 360, 367;
United States
v. Pugliese, 153 Fed. (2d) 497, 500-501; Johnson v.
United States
, 82 Fed. (2d) 500; Nash v.
United States
, 54 Fed. (2d) 1006, 1007; Waldeck v.
United States
, 2 Fed. (2d) 243, 245.
6
"Before you make those motions--I will again advise the jury that
any admissions by the defendant Whitley after the date of his arrest can
be considered by you in connection with the determination of the guilt
or innocence of the defendant Whitley together with the other testimony.
But any admissions by the defendant Whitley are not to be considered as
proof in connection with the guilt or innocence of any of the other
defendants. The reason for that I explained before to you, that the
admission by a defendant after his arrest of participation in an alleged
crime may be considered as evidence by the jury against him with the
other evidence because it is, as the law describes it, an admission
against interest which a person ordinarily would not make. However, if
such a person after his arrest implicates other defendants in such
admission it is not evidence against them, because as to those
defendants it is nothing more than hearsay evidence. I advise you of
that in connection with the testimony of the last witness [Greenberg] as
to any oral statements made by Whitley or any written statements made by
Whitley."
7
Safeguarding the separate interests of the defendants, the court also
said:
"The existence of the
conspiracy and each defendant's connection with it must be established
by individual proof based upon reasonable inference to be drawn from
such defendant's own actions, his own conduct, his own declarations, and
his own connection with the actions and conduct of the other alleged
co-conspirators.
* * *
"To find any defendant
guilty of conspiracy you must find that he actively participated
therein. Mere knowledge of an illegal act on the part of any
co-conspirator is insufficient. Mere association of one defendant with
another does not establish the existence of a conspiracy.
* * *
". . . if you find
that every circumstance relied upon as incriminating is susceptible of
two interpretations, each of which appears to be reasonable, and one of
which points to a defendant's guilt, the other to his innocence, it is
your duty to accept that of innocence and reject that which points to
guilt."
Appendix
to Opinion of The Court
"Whitley's confession
reads as follows:
"
United States of America
,
"Southern Judicial District of New York,
"ss.:
"JAMES WHITLEY, being
duly sworn, deposes and says:
"I reside at
65 West 133rd Street, Apartment 4E
,
New York
, N. Y. I make this statement in the presence of my attorney, Mr.
Bertram J. Adams of 299 Broadway, New York, N. Y., after being fully
advised that under the Constitution of the United States I hve the
privilege and right of not saying anything at all; that if I answer any
question anything I say could be used against me in any criminal
proceeding. Being fully aware of my rights, I make this statement of my
own free will to Special Investigators Albert Miller and William
Greenberg in the office of the Alcohol and Tobacco Tax Division,
143 Liberty Street
,
New York
, N. Y.
"Sometime around
Thanksgiving of 1949, a friend of mine introduced me to a man known to
me as Tony. This man asked me if I wanted to by some alcohol and I told
him I did. The meeting occurred on
126th Street
in
Harlem
. The man then told me to meet him the next day at a candy store on the
south side of
119th Street
, just east of
First Avenue
. When I got there, Tony introduced me to a man whose name I do not
know. This man told me to meet him that night on
100th Street
and
Second Avenue
. I met him there. He took my car and drove away. I little while later
he came back and told me that the car was parked on
13rd Street
and
Second Avenue
. I had purchased two 5-gallon cans of alcohol on that occasion and paid
him just before he drove away in my car. Thereafter, I would meet this
man around the candy store about twice a week and the same procedure
would be followed. This continued until about June or July of 1950.
"Tony was about
5'4" in height, about 55 years of age, had a dark complexion and
stocky build and, I believe, had brown eyes. He was apparently of
Italian extraction. The other man who sold me the alcohol was apparently
also of Italian descent, and he had a dark complexion. He spoke in
broken English. He had black hair and was about 27 or 28 years of age
and was about 5'9" in height. (Sometime in 1950, Investigator
Whited of the Alcohol and Tobacco Tax Division asked me about him and
showed me his picture.)
"At about that time,
this man sent me to Carl. He introduced Carl to me and told me that Carl
would take care of me from then on. I would meet Carl on
Second Avenue
between
121st Street
and
122nd Street
in a seafood restaurant and would purchase the alcohol from him.
"Carl is about
5'10" in height, has blond hair, blue eyes, light complexion and is
about 30 years of age. He is apparently of Italian descent. He is about
160 pounds. Carl would usually come to my home to see me and ask me if I
needed anything.
"Just before Carl went
to jail in 1950, he introduced me to Bobby. I have been shown a
photograph bearing ATU 3643 N. Y. dated 12/29/51 of Orlandi Delli Paoli,
and I identify it as that of the man known to me as Bobby. This was
sometime in the summer of 1951. Bobby would come to my house to see me.
If I placed an order with him he would set the date and the time for
seven or
eight o'clock
in the evening when I was to pick up the alcohol. The first time I met
him at
138th Street
and
Bruckner Boulevard
, in the
Bronx
. He took my car and was gone about one-half hour and then returned with
the alcohol. The second time I met him on the corner of
Bruckner Boulevard
and
Soundview Avenue
. From then on he would alternate the procedure: I would meet him one
night on
138th Street
and the next time at
Soundview Avenue
.
"About two months ago,
I began meeting Bobby at the Shell gasoline station known as the Bronx
River Service Station on
Bruckner Boulevard
just past the bridge crossing over to
Bronx
River
. I would usually leave my car parked on the street near the gas station
and meet Bobby outside of the gas station. He told me not to go into the
gas station as the attendant might not like it.
"About a month ago,
Bobby introduced me to another man whose name I do not know. I have been
shown a photograph marked ATU 3642 N. Y., dated
12/29/51
of Carmine Margiasso, and identify it as that of the man to whom Bobby
introduced me. Bobby also told me that if he was not present when I met
Margiasso, I was not to give Margiasso any money but was to pay him
(Bobby) the next time I saw him. Margiasso also followed the same
procedure: He would take my car, would be gone about 20 minutes, and
then return with the alcohol. Margiasso picked up my car about four
times.
"My purchases from
Bobby would consist of two or three 5-gallon cans of alcohol at a time
and were made once or twice a week. The last two times I paid Bobby $38
a can.
"On the evening of
Friday,
December 28, 19
51
, I had ordered two cans, and when Margiasso took my car I waited in the
lunch room near the gas station. When I thought it was time for
Margiasso to return, I went over to the gas station and waited in the
office after purchasing a package of cigarettes. Two officers who were
Federal officers came in and placed me and William Hudson under arrest.
Shortly after that happened, Bobby drove up and was arrested by the
Federal officers.
"I have read the above
statement consisting of three pages and it is true to the best of my
knowledge and belief.
"(Signed)
JAMES WHITLEY
"James Whitley
"Sworn to before me this 5th day of
January 1952.
"(Signed) WILLIAM GREENBERG
"William Greenberg,
Spec. Inv.
"WITNESS:
"(Signed) ALBERT MILLER
"Albert Miller, Spec.
Inv."
229 Fed. (2d) 319, 324-326.
[Dissenting
Opinion]
JUSTICE FRANKFURTER, whom
JUSTICE BLACK, JUSTICE DOUGLAS, and JUSTICE BRENNAN join, dissenting:
Prosecutions for conspiracy
present difficulties and temptations familiar to anyone with experience
as a federal prosecutor. The difficulties derive from observance of the
rules governing evidence admissible against some but not all defendants
in a criminal case. The temptations derive from the advantages of
prosecuting in one trial two or more persons collaborating in a criminal
enterprise. One of the most recurring of the difficulties pertains to
incriminating declarations by one or more of the defendants that are not
admissible against others. The dilemma is usually resolved by admitting
such evidence against the declarant but cautioning the jury against its
use in determining the guilt of the others. The fact of the matter is
that too often such admonition against misuse is intrinsically
ineffective in that the effect of such a nonadmissible declaration
cannot be wiped from the brains of the jurors. The admonition therefore
becomes a futile collocation of words and fails of its purpose as a
legal protection to defendants against whom such a declaration should
not tell. While enforcing the rule of admitting the declaration solely
against a declarant and admonishing the jury not to consider it against
other defendants, Judge Learned Hand, in a series of cases, has
recognized the psychological feat that this solution of the dilemma
demands of juries. He thus stated the problem:
"In effect, however, the rule probably
furthers, rather than impedes, the search for truth, and this perhaps
excuses the device which satisfies from while it violates substance;
that is, the recommendation to the jury of a mental gymnastic which is
beyond, not only their powers, but anybody else's." Nash v.
United States
, 54 Fed. (2d) 1006, 1007.
It may well be that where
such a declaration only glancingly, as it were, affects a co-defendant
who cannot be charged with the admitted declaration, the rule enforced
by the Court in this case does too little harm not to leave its
application to the discretion of the trial judge. But where the
conspirator's statement is so damning to another against whom it is
inadmissible, as is true in this case, the difficulty of introducing it
against the declarant without inevitable harm to a co-conspirator, the
petitioner in this case, is no justification for causing such harm. The
Government should not have the windfall of having the jury be influenced
by evidence against a defendant which, as a matter of law, they should
not consider but which they cannot put out of their minds. After all,
the prosecution could use the confession against the confessor and at
the same time avoid such weighty unfairness against a defendant who
cannot be charged with the declaration by not trying all the
co-conspirators in a single trial.
It is no answer to suggest
that here the petitioner-defendant's guilt is amply demonstrated by the
uninfected testimony against him. That is the best of reasons for trying
him freed from the inevitable unfairness of being affected by testimony
not admissible against him. In any event, it is not for an appellate
tribunal to know how the jury's mind would have operated if powerfully
improper evidence had not in effect been put in the scale against
petitioner.
In substance, I agree with
the dissenting opinion of Judge Frank, below, 229 Fed. (2d) 319, 322,
and would therefore reverse.