Incriminaton Before Grand
Jury
Page2
[68-1
USTC ¶9241]
United States of America
, Appellee v. Louis Leighton, Appellant
(CA-2),
U. S. Court of Appeals, 2nd Circuit, Docket No. 31476, 386 F2d 822,
12/15/67, Aff'g unreported District Court opinion
[18 U. S. C. 201(b)]
Criminal procedure: Bribery of IRS agent: Evidence: Concealed
recordings: Entrapment: Right to counsel.--In upholding the
defendant's conviction of bribing an Internal Revenue agent, the Court
of Appeals ruled: (1) the district court did not err in ordering the
defendant not to consult with his attorney during an eighty-five minute
luncheon recess at the trial, since this did not impair the defendant's
right to the effective assistance of counsel. At no time did either the
defendant or his attorney indicate that they had something to discuss
which might have affected the conduct of the defendant's defense; (2) a
recording of a conversation between the defendant and the Internal
Revenue agent made on a minifon concealed on the agent's person was
admissible; and (3) the defendant did not establish the defense of
entrapment as a matter of law.
Rob
ert M. Morgenthau, United States
Attorney, Elkan Abramowitz, Michael S. Fawer, Assistant United States
Attorneys, New York, N. Y., for appellee. Gilbert S. Rosenthal, 401
Broadway,
New York
, N. Y., for appellant.
Before
WATERMAN, FRIENDLY and SMITH, Circuit Judges.
SMITH,
Circuit Judge:
Appellant
Louis Leighton was convicted on trial to the jury in the Southern
District of New York, Dudley B. Bonsal, Judge, of bribing an
Internal Revenue Agent in violation of 18 U. S. C. §201(b), and he
appeals. We find no error and affirm the judgment.
The
alleged bribe was made during the second of two meetings with Field
Agent Tiffany at Leighton's place of business. Both parties agree that a
bribery suggestion was made at the first meeting of the agent and the
taxpayer. The litigants, of course, hotly dispute the authorship of the
bribery suggestion. Tiffany appeared at the second meeting armed with
both a concealed miniature wire recorder and a concealed miniature radio
transmitter. The transmitter failed to function well, but the recorder
produced a reproduction of a portion of the conversation between
Leighton and Tiffany which was later admitted into evidence at the
trial. Leighton now relies on three rulings of the trial court as bases
for reversal of his conviction: (1) that Leighton was ordered not to
consult with his attorney during a luncheon recess which occurred in the
interim between the direct and cross examination of Leighton; (2) that
the minifon recording of the conversation between Leighton and Tiffany
was admissible; and (3) that entrapment was not established as a matter
of law. Since Leighton made timely objections to these rulings they are
properly before us on appeal.
Leighton's
objection to the ruling of the trial court that he could not consult
with his attorney during the luncheon recess is framed in terms of the
violation of his right to counsel. But Leighton was represented by
retained counsel during the entire trial. What is actually at issue is
the question of the effective assistance of counsel. At no time during,
before, or after the recess, did either Leighton or his attorney
indicate that they did in fact have something to discuss which might
have affected Leighton's testimony or course of action. Leighton's
attorney did object to the judge's ruling, but the objection appears to
us an attempt to sow reversible error into the record, rather than an
effort to indicate to the trial judge that the attorney and client had
something to discuss. Compare United States v. Krull, 240 F. 2d
122 (5 Cir.), cert. denied 353
U. S.
915 (1957). We conclude that the government has established beyond a
reasonable doubt that the appellant's right to the effective assistance
of counsel was not impaired by the ruling of the trial court. See Chapman
v.
California
, 386
U. S.
18, 87
S. Ct.
824 (1967).
Leighton's
reliance upon United States v. Venuto [50-1 USTC ¶9333], 182 F.
2d 519 (3 Cir. 1950), is misplaced. That case involved a series of
rulings barring communication between a defendant and his attorney in a
four-day bank deposit reconstruction income tax trial involving
voluminous records. The harm done by the ruling in those circumstances
is self-evident. In the case before us, only one eighty-five minute
luncheon recess is involved. The ruling in the instant case barring
communication between the defendant and his counsel during the recess
between direct and cross examination was also applied to every other
witness who testified at the trial. The application of this ruling to
others than the defendant is not in issue. Its application to the
defendant was quite plainly uncalled for, and we are unable to
understand why it was sought or made as to him. We will not, however,
reverse the conviction solely on this ground when we can discern no
actual harm to the right to effective assistance of counsel, and are
convinced that there was none.
Leighton
also objected to the admission into evidence of the wire recording made
by Agent Tiffany of their conversation. A sound recording made by or
with the permission of a government agent who is a party to the recorded
conversation is admissible. Lopez v.
United States
, 373
U. S.
427 (1963). The Supreme Court has twice during the last year reaffirmed
the position that it had previously enunciated in Lopez, Osborn v.
United States, 385 U. S. 323, 87 S. Ct. 429 (1966); Berger v.
New York
, 388
U. S.
41, 87
S. Ct.
1873, 1880 (1967), even though some commentators appear to have doubts
as to the soundness of the rule. See discussion on the basis of the Lopez
rule in Westin, Privacy and Freedom (1967) 356-359.
Lastly,
Leighton contends that the district judge erred when he refused to enter
a judgment of acquittal since Leighton had established the defense of
entrapment as a matter of law. The entrapment defense hinged on which of
two conflicting versions of the first conversation between Leighton and
Agent Tiffany was to be believed. The entrapment defense rested upon a
question of credibility, properly put to the jury. Osborn v.
United States
, 385
U. S.
323, 331, 87
S. Ct.
429, 434 (1966). Since Leighton does not even allege any errors in the
charge to the jury, no grounds for reversal in connection with the
question of entrapment are shown.
The
judgment of conviction is affirmed.
[58-2
USTC ¶9641]Harry H. Isaacs, Appellant v.
United States of America
, Appellee
(CA-8),
U. S. Court of Appeals, 8th Circuit, No. 15,964, 256 F2d 654, 6/27/58,
Reversing unreported District Ct. decision
[1939 Code Sec. 145(b)--similar to 1954 Code Sec. 7201]
Refusal to testify before grand jury: Invocation of Fifth
Amendment.--During 1953 and 1954, the corporation of which appellant
was president and majority stockholder made out about $99,000 in checks
to "Cash" and charged its purchases account, deducting the
amount on its income tax returns. The payee or payees of the checks were
not disclosed. Upon audit of the corporation returns, the deduction was
disallowed, but appellant refused to disclose the names of the
recipients of the $99,000, because they had not reported it as income on
their income tax returns. When appellant was subpoenaed and appeared
before the grand jury, he declined to answer any questions as to the
disposition of the $99,000 on the ground that his answers might
incriminate him, although he denied that he was guilty of tax evasion.
The District Court held him guilty of contempt and sentenced him to six
months imprisonment. On appeal, it is held that the alleged claim of
innocence did not preclude appellant from relying on the Constitutional
privilege afforded by the Fifth Amendment, as the claim of innocence is
not an intentional waiver of the privilege. It is held also that the
District Court erred in promising appellant immunity from prosecution if
he would answer the interrogatories.
Melvin
H. Siegel (Leonard, Street and Deinard were with him on brief), for
appellant. George E. MacKinnon, United States Attorney, Kenneth G.
Owens, Assistant United States Attorney (Clifford Janes, Assistant
United States Attorney, was with them on brief), for appellee.
Before
GARDNER, Chief Judge, and WOODROUGH and VAN OSTERHOUT, Circuit Judges.
[Contempt
of Court]
GARDNER,
Chief Judge:
This
appeal is from a judgment finding appellant guilty of contempt of court
because of his refusal to answer certain question originally put to him
as a witness before a Federal grand jury. Appellant was subpoenaed to
appear before the United States Grand Jury for the District of Minnesota
on January 29, 1958. The grand jury was then investigating the possible
criminal violation of the Internal Revenue laws by reason of the failure
of a person or persons unknown to report as income some $99,000 paid out
in cash by the American Iron and Steel Company, of which appellant was
president and majority stockholder, during the years 1953 and 1954.
[Checks
Issued to "Cash"]
American
Iron and Steel Company maintained a special account or cash fund from
which it paid suppliers of scrap from time to time in cash. During the
period from October 13, 1953, through September 14, 1954, it issued
seventeen checks totaling $101,000 made payable to "Cash" and
signed on behalf of the company by appellant in two instances and by his
son in the others. Some $99,000 of the proceeds of these checks, though
charged on the books of the company to purchases and deducted as
expenses in the company's Federal income tax returns for the years in
question, were not transferred to the special account for scrap
purchases and the company's books nowhere reflected to whom the monies
were disbursed. Testimony was given before the grand jury that during
the course of an audit in 1957 of the company's tax returns for the
years ending July 31, 1953, and July 31, 1954, the $99,000 was
disallowed as expenses because American Iron and Steel Company and its
officers declined to state to whom the monies were paid. An Internal
Revenue Agent testified that appellant's son, Fred Isaacs, declined to
state to whom the $99,000 was disbursed because the recipients "had
not reported it as gross income" on their Federal income tax
returns. The company accordingly paid an additional tax for those years.
Appellant declined to answer any questions as to the disposition of the
$99,000 on the ground that his answers might tend to incriminate him. At
this stage of the proceeding before the grand jury the following
occurred:
"Q.
And has it been called to your attention or do you know whether there
were a substantial number of checks between October, 1953 and September,
1954 of checks made out to Cash and cashed by American Iron and Steel
Company that were not entered in the account of that special fund?
"A.
I refuse to answer that; I stand on my constitutional rights.
"Q.
Now, Mr. Isaacs, you have been a substantial business man in
Minneapolis
for some years?
"A.
Yes, sir.
"Q.
And you consider yourself a man of good reputation in
Minneapolis
?
"A.
Yes, sir.
"Q.
And you recognize and you have always recognized, I presume, that it's
an obligation of a person to aid and assist the Government and the
Courts and their juries in fulfilling their obligations?
"A.
Yes, sir.
"Q.
And you consider that you are a person who performs your obligations to
people--
"A.
Yes, sir.
"Q.
Now, with that in mind, this jury is asking and would like to know if
there were such checks during that period?
"A.
Beg pardon?
"Q.
If there were checks drawn on that general fund?
"A.
I refuse to answer and stand on my constitutional rights.
By
Mr. MacKinnon:
"Q.
Well, what do you mean, Mr. Isaacs? This is very alarming to me. We are
not prosecuting you. Your sole ground for claiming that privilege rests
upon the fact that you have been guilty of some crime.
"A.
No, I haven't, but I've made--
"Q.
Well, then, if you have not been guilty of a crime you have to answer
the question, because the extent of your constitutional right is to
protect yourself from giving evidence against yourself of a crime. There
isn't any other right that you have to refuse to testify except that.
Now, if you have been guilty of a crime and you want to say so on that
stand under oath, then you have got a constitutional right to refuse to
testify. But frankly, we didn't think you had, and that's the reason we
called you.
"A.
Well, I've taken if up with my attorneys and that's their advice, so I
have to stand on it.
"Q.
Well, you said though that you have not been guilty of any crime.
"A.
As far as I know, no.
"Q.
Well, we're not prosecuting you for any crime.
"A.
I don't know.
"Q.
Well, I can tell you that.
"A.
I still stand on my constitutional rights.
"Q.
You don't have a constitutional right.
"A.
I don't?
"Q.
No, sir, not to testify unless you've been guilty of a crime. If you
have been guilty of a crime, you've got a constitutional right. * *
*"
Appellant
was further interrogated with reference to various business transactions
of and various checks issued by American Iron and Steel Company, to much
of which he declined to answer, claiming that his answers might tend to
incriminate him.
He
was then taken before the District Court accompanied by his attorney,
Mr. Siegel, whereupon the United States Attorney moved the court for an
order directing appellant to answer certain questions which he had
declined to answer before the grand jury and also to answer questions as
to the names of the recipients of the $99,000. In the course of the
hearing before the court, the court asked the United States Attorney:
"THE
COURT: And from what Mr. Isaacs did state in response to your
questioning before the Grand Jury, you are satisfied in your own mind
that he is not a recipient of such money?
"MR.
MacKINNON: Well, I wouldn't necessarily conclude that completely. But he
had made previous statements--I think that is the state of the record,
that he had made previous statements, he or other people with the
American Iron & Steel--that this money was paid to other people who
had not reported it, and for that reason they were going to pay the tax
on it and not claim it as a deduction."
[Immunity]
Appellant's
attorney then inquired of the United States Attorney whether "if
any evidence were adduced in the course of this investigation that any
of this money got into the hands of either of the Isaacs, the United
States Attorney will say now that it won't prosecute?", to which
the United States Attorney replied that he would "have to prove it
by other evidence than anything he ever gave me or any lead that I ever
got from his testimony". The United States Attorney upon being
interrogated by the court as to whether he could extend immunity to
appellant if he should answer the questions in controversy said:
"MR.
MacKINNON: We can't give any immunity except such immunity as he
naturally acquires if he does testify under compulsion to some
incriminating circumstances."
Whereupon
the court said:
"THE
COURT: He is testifying under compulsion here, and we have heard the
questions read that you want answered. I think there is one additional
question that may be all-inclusive, that you may want to ask, and that
is, 'Will you please name the payees of those checks?'
"MR.
MacKINNON: That is right.
"THE
COURT: Those are all the questions you have in mind asking him, on which
he is fearful of self-incrimination?
"MR.
MacKINNON: That is right.
"THE
COURT: I will say this, Mr. Siegel, that this Court will advise the
witness, Mr. Harry H. Isaacs, in open court that he will be directed to
answer those questions and that the Court will extend immunity to him in
connection with the answers he may make thereto."
Thereupon,
the court below ordered that appellant answer certain questions which he
had refused to answer before the grand jury and further ordered that
"as a condition to the said witness, Harry H. Isaacs, conforming to
the direction of the Court in the foregoing respect, that the Court does
hereby extend immunity to him in connection with any answer he may give
to said questions or for any prosecution by reason of receipt himself or
payment to anyone of the monies in question". Whereupon, appellant
was brought before the grand jury where he again declined to answer the
interrogatories as to the $99,000 or as to who received the same, on the
ground that the answers might tend to incriminate him. Appellant was
then ordered to appear before the District Court to show cause why he
should not be adjudged in contempt of court for failure to answer as
ordered. After hearing the court found appellant guilty as charged and
sentenced him to thirty days imprisonment. Further facts in connection
with the proceedings before the court and grand jury will be developed
in the course of this opinion.
[The
Fifth Amendment]
On
this appeal appellant in substance contends that: (1) under the Fifth
Amendment a witness may decline to answer questions before a grand jury
if the answers may possibly tend to incriminate him, (2) appellant's
assertion that he was not guilty of any Federal offense did not deprive
him of any right to invoke the protection of the Fifth Amendment, (3)
the fact that the United States Attorney asserted that he was not
investigating or prosecuting appellant did not preclude any possibility
that appellant's answers to the questions involved might tend to
incriminate him or deprive him of his privilege not to answer under the
Fifth Amendment, and (4) the court below was without power to grant
appellant immunity from prosecution.
The
Fifth Amendment to the United States Constitution provides that no
person shall be compelled in any criminal case to be a witness against
himself and one called as a witness before a grand jury may in a proper
case invoke the protection of the Fifth Amendment. The right not to be
compelled to be a witness against himself in a criminal case has
traditionally been regarded as a sacred one and the privilege not so to
testify may be invoked both by the guilty and the innocent. Thus in
United States
v. Burr, 25 Fed. Cas. 38, when the United States Constitution
was still in its infancy, Chief Justice Marshall said:
"If
a direct answer to it may criminate himself, then he must be the
sole judge what his answer would be. The court cannot participate with
him in this judgment, because they cannot decide on the effect of his
answer without knowing what it would be; and a disclosure of that fact
to the judges would strip him of the privilege which the law allows, and
which he claims.
*
* *
"Many
links frequently compose that chain of testimony which is necessary to
convict any individual of a crime. It appears to the court to be the
true sense of the rule that no witness is compellable to furnish any one
of them against himself."
The
law on this question as developed and exemplified by recent controlling
opinions of the Supreme Court is fairly well settled but the difficulty
arises in applying the principles of law so announced to the particular
facts or setting in each case. In doing so we are admonished that this
provision of the amendment must be accorded liberal construction in
favor of the right it was intended to secure. To warrant a denial of the
privilege it must appear in the setting in which the question is asked
that the answer cannot possibly have a tendency to incriminate. Hoffman
v. United States, 341 U. S. 479; Greenberg v. United Stats,
343 U. S. 918; Singleton v. United States, 343 U. S. 944; Emspak
v. United States, 349 U. S. 190; Kiewel v. United States, 8
Cir., 204 Fed. (2d) 1;
United States
v. Coffey, 3 Cir., 198 Fed. (2d) 438; Ballantyne v.
United States
, 5 Cir., 237 Fed. (2d) 657 [56-2 USTC ¶9959]. In Hoffman v.
United States
, supra, the court said:
"The
privilege afforded not only extends to answers that would in themselves
support a conviction under a federal criminal statute but likewise
embraces those which would furnish a link in the chain of evidence
needed to prosecute the claimant for a federal crime.
*
* *
"To
sustain the privilege, it need only be evident from implications of the
question, in the setting in which it is asked, that a responsive answer
to the question or an explanation of why it cannot be answered might be
dangerous because injurious disclosure could result.
*
* *
"In
this setting it was not 'perfectly clear, from a careful
consideration of all the circumstances in the case, that the witness is
mistaken, and that the answer(s) cannot possibly have such
tendency' to incriminate. Temple v. Commonwalth, 75
Va.
829, 898 (1881), cited witn approval in Counselman v. Hitchcock,
142
U. S.
547, 579-580 (1892). See also, Arndstein v. McCarthy, 254
U. S.
71 (1920).
*
* *
"If
this result adds to the burden of diligence and efficiency resting on
enforcement authorities, any other conclusion would seriously compromise
an important constitutional liberty. 'The immediate and potential evils
of compulsory self-disclosure transcend any difficulties that the
exercise of the privilege may impose on society, in the deterction and
prosecution of crime.'
United States
v. White, 322
U. S.
694, 698 (1944). Pertinent here is the observation of Mr. Justice
Brandeis for this Court in McCarthy v. Arndstein, 266 U. S. 34,
42 (1924): 'If Congress should hereafter conclude that a full disclosure
. . . by the witness is of greater importance than the possibility of
punishing them for some crime in the past, it can, as in other cases,
confer the power of unrestricted examination by providing complete
immunity.'"
In
Emspak v.
United States
, supra, in an opinion by Chief Justice Warren speaking for the
court, it is said:
"The
protection of the Self-Incrimination Clause is not limited to admissions
that 'would subject (a witness) to criminal prosecution'; for this Court
has repeatedly held that 'Whether such admissions by themselves would
support a conviction under a criminal statute is immaterial' and that
the privilege also extends to admissions that may only tend to
incriminate."
In
United States
v. Coffey, supra, the court after reviewing the Hoffman,
Greenberg and Singleton cases, supra, summed up its
conclusion as to the present state of the law as follows:
"Accordingly,
we now have to reinterpret the Supreme Court's Hoffman opinion in
the light of that Court's subsequent revelation that Hoffman
proceeds on a theory broad enough to require the same result in the
circumstances of Greenberg and Singleton. Specifically, we
think the problem is what to do about apparently innocuous questions,
the answers to which are admittedly not incriminating in themselves,
when there are no additional facts before the Court which suggest
particular connecting links through which the answer might lead to and
might result in incrimination of the witness. We think the Supreme Court
is saying that such facts are not necessary to the sustaining of the
privilege. The decision in the Mason case would not be followed
today. It is enough (1) that the trial court be shown by argument how
conceivable a prosecutor, building on the seemingly harmless answer,
might proceed step by step to link the witness with some crime against
the
United States
, and (2) that this suggested course and scheme of linkage not seem
incredible in the circumstances of the particular case. It is in this
latter connection, the credibility of the suggested connecting chain,
that the reputation and known history of the witness may be significant.
"Finally,
in determining whether the witness really apprehends danger in answering
a question, the judge cannot permit himself to be skeptical; rather must
he be acutely aware that in the deviousness of crime and its detection
incrimination may be approached and achieved by obscure and unlikely
lines of inquiry."
In
the instant case the United States Attorney advised the appellant, while
seeking to induce him to answer the interrogatories here involved, that
he might invoke the protection of the Fifth Amendment only if he were
guilty of a crime, and apparently the court was also of this view. Such
an interpretation would unduly abridge and render ineffectual the
protection guaranteed by the Constitution, which manifestly protects the
innocent as the guilty. In Kiewel v.
United States
, supra, in dicussing the sufficiency of the evidence to sustain a
conviction we said inter alia:
"Was
there reasonable possibility from the nature of the inquiry made or
Respondent that the was in danger of incriminating himself in answering
the questions propounded to him? * * * It is incumbent upon us,
therefore, to examine the circumstances under which the questions were
propounded, and their implications, and if therefrom we conclude that
there is reasonable ground to believe that the investigation of the
subject matter of the inquiry might lead to the incrimination of
Respondent, should he make the answers requested, we must enforce the
privilege, unless, as stated in the Hoffman case, it is perfectly
clear that Respondent is wrong in believing that answering the
particular questions could possibly have a tendency to incriminate
him."
The
grand jury in the instant case was investigating the possible criminal
violation of the Internal Revenue laws by reason of the failure of a
person or persons unknown to report as income some $99,000 paid out in
cash by the American Iron and Steel Company during the years 1953 and
1954. Apparently and recipients of these funds were guilty of the crime
of evading the payment of income taxes on the funds so received.
Appellant was asked to give the names of the recipients of these funds,
thus possibly furnishing the link connecting appellant, either with
aiding or abetting the recipients of the funds in the commission of the
crime or in conspiring with them to commit the crime, and as suggested
by counsel for appellant, "Anyone who aided and abetted the
recipients of the $99,000.00 to conceal the receipt of taxable income,
or conspired with them to do so, could be convicted of a crime under 18
U. S. C. Secs. 2 and 371." It can also be possible that appellant
received part of this $99,000 himself and failed to report it for
Federal income tax purposes, or even that some of the withdrawals made
by him for others were taxable to him. In fact, the grand jury was
apparently investigating his record as to the payment or non-payment of
income taxes because it had subpoenaed his accountants to produce before
it all their records relative to his personal income tax returns for the
years 1952 to 1957. In the Kiewel case, supra, we reversed
on the ground that Kiewel himself might have retained some of the monies
or that some of his withdrawals for others were taxable to him and were
unreported. On this phase of the case we are of the view that there was
a reasonable possibility that the answers to the questions propounded
might tend to incriminate appellant.
[Waiver
of Privilege?]
It
is, however, argued by the government that the appellant waived his
privilege by asserting that he was not guilty of any Federal offense. In
approaching this contention we must have in mind the rule that the
courts must "indulge every reasonable presumption against waiver of
fundamental constitutional rights." Johnson v. Zerbst, 304
U. S.
458. The argument implies that testimony will never tend to incriminate
an innocent person. Guilt or innocence is usually a question to be
determined by a jury and we may take judicial notice of the fact that
many an accused person on trial is found to be not guilty. In such cases
we may assume there was evidence tending to show that the accused,
though innocent, was guilty of a crime, otherwise there would have been
no prosecution. In the instant case appellant distinctly claimed the
privilege of refusing to answer the interrogatories propounded to him.
The mere fact that in answer to the question of the United States
Attorney he said he was not guilty of a crime as far as he knew is a far
cry from an intentional waiver of his provilege. Emspak v. United
States, supra; United States v. St. Pierre, 2 Cir., 128 Fed. (2d)
979; Ballantyne v.
United States
, supra;
United States
v. Costello, 2 Cir., 198 Fed. (2d) 200;
United States
v. Courtney, 2 Cir., 236 Fed. (2d) 921. In
United States
v.
St. Pierre
, supra, the court answering the argument that the accused had
waived his privilege said:
"Nor
is it material that appellant stated at several points that he had
committed no federal crime."
In
Ballantyne v.
United States
, supra, the court said:
"In
any event, the United States Attorney could not, by thus skillfully
securing from appellant a general claim of innocence, preclude him from
thereafter relying upon his constitutional privilege * * *."
We
are clear that the alleged claim of innocence by appellant did not
preclude him from relying upon his Constitutional privilege.
[Promise
of Immunity Unwarranted]
The
court declared that it would grant immunity from prosecution if
appellant would answer the interrogatories and it is argued that in
these circumstances the appellant could not rely upon the Constitutional
privilege of refusing to answer. The short answer to this contention is
that the court was without authority to grant immunity from prosecution.
The attempt to grant such an immunity was not within the judicial power
but was an attempted exercise of executive or legislative power. United
States v. Ford, 99 U. S. 594; McCarthy v. Arndstein, 266 U.
S. 34; Ullmann v. United States, 350 U. S. 422.
In
view of our conclusions on the issues considered we pretermit
consideration of other issues discussed by counsel for the respective
parties. The judgment finding appellant guilty of contempt of court is
therefore reversed and appellant's present conviction is set aside.
[54-2
USTC ¶9604]
United States of America
v. Hyman Harvey Klein, Isidor J. Klein, Albert McLennan, George Norgan,
Ellis Rosenberg, Maurice Haas, Irving A. Koerner, Morris O. Alprin and
Albert Roer, Defendants
In
the United States District Court for the Southern District of New York,
C 144-144, 124 FSupp 476, September 30, 1954
[1939 Code Sec. 145--similar to 1954 Secs. 7201-7203]
Criminal penalties: Incrimination before grand jury.--Taxpayers'
motion to dismiss an indictment was overruled when they failed to show
that, in testifying as witnesses before the grand jury which later
indicted them, they should have been informed by the United States
attorney of their privilege under the Fifth Amendment. Taxpayers were
not ignorant of the privilege, two of them being lawyers, and the Court
refused to dismiss the indictment upon their tardy assertion of the
privilege.
[1939 Code Sec. 145--similar to 1954 Secs. 7201-7203]
Criminal penalties: Denial of bill of particulars.--The
government complied with taxpayers' demand for details of the nature,
source and amount of the income on which the indictment alleged tax was
due the
United States
. The District Court denied taxpayers' further demand for a bill of
particulars on the grounds that disclosure of many of the items sought
would be tantamount to compelling a premature disclosure of the
government's case and would constitute an encroachment upon the
functions of the trial court.
[1939 Code Sec. 145--similar to 1954 Secs. 7201-7203]
Criminal penalties: Miscellaneous defenses.--The District Court
denied taxpayers' motion to strike as prejudicial certain allegations in
the indictment because the allegations, concerning Office of Price
Administration controversies in which taxpayers were previously
involved, were relevant to the criminal tax violations charged in the
indictment.
[1939 Code Sec. 145--similar to 1954 Secs. 7201-7203]
Criminal penalties: Language of the statute.--Taxpayers' argument
that the allegations were vague and uncertain was overruled. The
District Court ruled that concealment of business activities and the
source and nature of income constitutes a defrauding of the government
under the very broad meaning of the words of the statute relating to
conspiring and/or defrauding the
United States
.
[1939 Code Sec. 145--similar to 1954 Secs. 7201-7203]
Criminal penalties: Conspiracy.--Taxpayers' motion to dismiss a
conspiracy count on the grounds that it was the same as the first
substantive counts in the indictment was overruled. The District Court
ruled that substantive and conspiracy charges are separate and distinct
even though both may relate to the same transaction or stem from the
same facts.
J.
Edward Lumbard
,
United States
Attorney for the Southern District of New York, (Thomas W. Hill, Jr.,
Assistant
United States
Attorney, of Counsel), for
United States
. E. Gayle McGuigan, 233 Broadway,
New York
7, N. Y., for defendant, Hyman Harvey Klein. Michael Kaminsky, 122 East
42nd Street, New York City, N. Y., F. Joseph Donohue, 503 D Street, N.
W., Washington, D. C. (Abraham S. Goldstein, of Counsel), for defendants
Morris O. Alprin and Maurice Haas. Samuel Becker,
595 Madison Avenue
,
New York
22, N. Y., for defendant Irving A. Koerner. Greenman, Shea, Sandomire
& Zimet, 20 Pine Street, New York 5, N. Y. (Frederick F. Greenman,
of Counsel), Barr & Barr, 20 Pine Street, New York 5, N. Y. (Jerome
H. Barr, of Counsel), for defendant Albert Roer.
Opinion
PALMIERI,
District Judge:
Defendants
Hass, Alprin, Roer and Koerner were subpoenaed to appear and testify
before a grand jury that subsequently indicted them. They were charged
in a five count indictment with three substantive attempts to evade
taxes and two conspiracies, one to evade tax, and the other to defraud
the Government in the exercise of a governmental function, namely, the
assessment and collection of income taxes. The United States Attorney
who questioned them before the grand jury did not inform them that the
Fifth Amendment to the Constitution of the
United States
gave them the privilege to refuse to answer questions which might
incriminate them. Although Government counsel states that these
defendants appeared before the grand jury without any compulsion
whatever because none of them was served personally, I shall assume, for
the purposes of the motions before me, that they appeared and testified
before the grand jury under the compulsion of subpoenas. All of the
named defendants claim that because of the foregoing facts their rights
under the Fifth Amendment were violated; Haas and Alprin claim further
that their rights under 18 U. S. C. §3481 were violated; and on these
grounds the named defendants move to dismiss the indictment.
Defendants
seek to bring themselves within the compass of the cases that state that
a defendant in a criminal case cannot be compelled to testify before a
grand jury on matters pertaining to that case. See
United States
v. Lawn, 115 Fed. Supp. 674 (S. D. N. Y. 1953) [53-1 USTC
¶9288]. But these cases are not applicable because defendants were not
charged with the commission of any offense against the
United States
when they appeared before the grand jury. At that time defendants were
witnesses, and although it was probable that the grand jury would, as it
did, subsequently indict them, they are not entitled to the protection
that is afforded a defendant.
United States
v. Scully, 119 Fed. Supp. 225 (S. D. N. Y. 1954). Therefore,
defendants' rights were not violated when they were subpoenaed to appear
and testify before a grand jury;
United States
v. Scully, supra; United States v. Wilson, 42 Fed. Supp. 721 (D.
Del. 1942); and if they desired the protection of the privilege, they
should have claimed it. See
United States
v. Monia, 317
U. S.
424, 427 (1943);
United States
ex rel. Vajtauer v. Commissioner, 273
U. S.
103 (1927).
[Grand
Jury Witnesses]
Defendants
urge upon the Court that when persons who are likely to be indicted are
called as witnesses before a grand jury, the United States Attorney
should be required to inform them of their privilege under the Fifth
Amendment. Cf. Federal Rules of Criminal Procedure 5(b) and 40(b)(2).
However, defendants (two of whom are lawyers and all of whom were
represented by counsel) do not claim that they were ignorant of the
privilege, and that if they had known of it they would not have answered
the questions put to them. They have failed to make any showing of
fraud, duress, or deception on the part of the Government which they
contend resulted in their testifying before the grand jury. It is clear
that under such circumstances, a United States Attorney is not required
to inform a grand jury witness who is under suspicion of his privilege. Powers
v. United States, 223 U. S. 303 (1912); United States v. Scully,
supra; United States v. Wilson, supra; see Wilson v. United
States, 162 U. S. 613 (1896); Pulford v. United States, 155
Fed. (2d) 944, 947-948 (6th Cir. 1946); 8 Wigmore on Evidence §2269 (3d
ed. 1940). The defendants have placed great emphasis upon the statement
of the Assistant United States Attorney, made upon the argument of these
motions, to the effect that at the time of the grand jury proceedings,
he believed that there was a strong possibility that information the
Government then had in its possession would lead to the indictment of
the defendants Haas and Alprin. But it is quite apparent that the
defendants and their counsel were well aware of this possibility.
Moreover, the applicable rules of law are not affected by the state of
mind of Government counsel.
Nor
can I conclude on the basis of the affidavits before me that the
defendants were in any way overreached or that substantial justice was
frustrated. It would seem that, far from being deprived of their rights,
the defendants have sedulously availed themselves of their rights at
every stage of the proceedings. Having failed to invoke the privilege
under the Fifth Amendment in good time, they cannot be heard to say that
they would now decide otherwise and that the indictment should be
dismissed upon their tardy assertion of privilege.
With
respect to the defendants' motions for bills of particulars, they must,
except to the extent consented to by the Government, be denied. The
defendants have made a large number of demands pursuant to Rule 7(f) of
the Federal Rules of Criminal Procedure. These demands are in many
instances repeated by the five named defendants whose motions are before
me. No useful purpose can be served by reciting the numerous demands.
All
five named defendants seek to compel the Government to disclose the
nature and source of income and computations of tax. The Government has
already complied with this demand. In accordance with my direction upon
the oral argument of the motions for bills of particulars, the United
States Attorney has submitted to me the details of the nature, source
and amount of the income on which it is alleged in the indictment a tax
was due to the United States; the amount of the tax is set forth; and
there is also furnished that portion of the Federal income tax return of
the defendant Hyman Harvey Klein which is alleged to be false.
Furthermore, the Government has set forth those portions of the 1952
Federal income tax returns of defendants Alprin and Koerner and of the
1950 return of Roer which are alleged to be false. This information has
been communicated to the defendants.
[Bill
of Particulars]
It
is my opinion that by this disclosure, the defendants have obtained all
the information to which they are properly entitled. I am mindful that
the purposes of a bill of particulars are (1) to obviate surprise at a
trial and enable the defendant to prepare his defense and (2) to permit
him to plead double jeopardy in the event of subsequent prosecution for
the same offense.
United States
v. Foster, 80 Fed. Supp. 479, 486 (S. D. N. Y. 1948). But the
admin
istration of justice does not require the Government to disclose its
evidence prior to trial in a bill of particulars, United States v.
Flynn, 103 Fed. Supp. 925, 932 (S. D. N. Y. 1951). To compel
disclosure of many of the items sought by the defendants would be
tantamount to compelling a premature disclosure of the Government's case
and would constitute an encroachment upon the functions of the trial
court. Cf.
United States
v. Krulewitch, 145 Fed. (2d) 76 (2d Cir. 1944),
United States
v. Cohen, 145 Fed. (2d) 82, 92 (2d Cir. 1944). Moreover, many of
the requests for disclosure made by the defendants are, in effect,
requests to ascertain the theory of the prosecution's case. But I know
of no authority permitting an exploration of the theory of the
Government's case in advance of trial. Many of the statements made by
the defendants in their oral arguments and in their numerous briefs are
based, essentially, upon the desire to avoid the inconvenience incident
to the preparation for trial of a criminal tax case involving very large
sums of money and covering a period of several years. But if the
prospect of trial appears burdensome, it is attributable to the
defendants themselves and to their methods of doing business. The
defendants are familiar with their own transactions. Upon all of the
facts and circumstances alluded to upon the arguments and in the
affidavits, it is my opinion that the defendants are not entitled to any
disclosures other than the ones already provided pursuant to my
direction. See Wong Tai v.
United States
, 273
U. S.
77 (1927).
Defendants'
motions under Rule 7(d) of the Federal Rules of Criminal Procedure, to
strike as prejudicial surplusage certain allegations and overt acts
under the Fourth Count of the indictment, must be denied. A motion made
pursuant to this rule will be granted only where it is clear that the
allegation complained of is not relevant to the charge contained in the
indictment and is inflammatory and prejudicial. See
United States
v. New York Great Atlantic & Pacific Tea Company, 137 Fed.
(2d) 459 (5th Cir. 1943). In the instant case the allegations concerning
Office of Price Administration controversies in which the defendants
were previously involved are relevant because the Government charges
that the defendants were engaged in manipulating OPA regulations for the
purpose of perpetrating the criminal tax violations charged in the
indictment.
The
motion to dismiss Count Five of the indictment, the second of the two
conspiracy counts, must also be denied. This count charges that the
defendants ". . . did unlawfully, wilfully and knowingly combine,
conspire, confederate and agree together and with each other . . . to
defraud the United States in the exercise of its governmental functions
in the assessment and collection of income taxes imposed by law and in
the management of the revenue, in that the defendants attempted to
conceal and continued to conceal the nature of their business activities
and the source and nature of their income."
The
defendants argue that facts sufficient to constitute an offense against
the
United States
have not been alleged, that the allegation is duplicitous and uncertain,
and that the allegation is so vague as to violate the Sixth Amendment of
the Constitution.
This
count is based upon Title 18 U. S. C. §371, which makes it a crime to
". . . conspire either to commit any offense against the
United States
, or to defraud the
United States
. . .". The second part of this disjunctive phrase is of broad
import and contemplates wrongs other than conspiracies to commit
offenses against the
United States
which are defined by statute. See Hammerschmidt v.
United States
, 265
U. S.
182, 188 (1924); Haas v. Henkel, 216
U. S.
462, 479-480 (1910); Curley v.
United States
, 130 Fed. 1, 8-9 (1st Cir. 1904).
The
defendants conceded upon oral argument that an offense is sufficiently
alleged in Count Five if the last twenty-five words of the first
paragraph were omitted. But, the argument runs, since these
words--"in that the defendants attempted to conceal and continued
to conceal the nature of their business activities and the source and
nature of their income"--were added, the entire count is rendered
insufficient and must be struck down because they supersede all that
precedes them and are not sufficient in themselves to constitute a
charge of conspiracy. I think the argument is based upon a distortion of
plain language.
In
view of the very broad meaning given to the words of the statute
"or to defraud the United States", it is clear that a
concealment of business activities and the source and nature of income
by the defendants as part of their conspiracy can be deemed to
constitute a defrauding of the Government in the exercise of an
important and essential government function, namely, the assessment and
collection of taxes. See Curley v.
United States
, supra, at p. 9; United States v. Stone, 135 Fed. 392 (D. N.
J. 1905).
Finally,
the motions to dismiss the Fourth Count on the ground that it charges
the same offense as that charged by the First, Second and Third Counts
of the indictment or, in the alternative, to compel the
United States
to elect between the first three counts and the fourth count, must be
denied. The first three counts, as has been already indicated, charge
substantive offenses whereas the fourth count charges a conspiracy. A
substantive offense is separate and distinct in law from a conspiracy
offense even though both may relate to the same transaction or stem from
the same facts. They can form part of the same indictment and a
defendant cannot, on that account, complain of duplicity or compel an
election by the Government. Pereira v.
United States
, 347
U. S.
1, 11-12 (1954).
The
Clerk of the court will be directed to place this case upon the Criminal
Trial Calendar for October 11, 1954, so that a suitable trial date can
be fixed.
[56-2
USTC ¶9959]Ray C. Ballantyne, Appellant v.
United States of America
, Appellee
(CA-5),
U. S. Court of Appeals, 5th Circuit, No. 15822, 237 F2d 657, 10/10/56,
Reversing an unreported District Court decision
[1939 Code Secs. 3615(e) and 3800--substantially unchanged in 1954 Code
Secs. 7604(b) and 7402(a), respectively]
Crimes: Jurisdiction of District Courts: Order to answer questions
before grand jury.--The conviction of taxpayer, a vice-president of
a corporation engaged in construction work, for contempt for his refusal
to obey orders of the District Court requiring him to answer certain
questions as a witness before the grand jury because his answers might
tend to incriminate him, was not sustained. The court held his answers,
truthfully made, might have proven him criminally responsible for
violating income tax laws, and he was entitled to invoke the Fifth
Amendment, however dishonest he may have been, for the privilege extends
to the guilty as well as the innocent. The court held also any lack of
technical specificity by the District Court in stating the offense was
harmless, not affecting taxpayer"s substantial rights or
constituting a deprivation of due process. One dissent in part.
Louis
W. Graves, Jr., James R. Cornish, Joseph Cash,
houston
,
Tex.
, for appellant. Malcolm R. Wilkey, United States Attorney, James T.
Dowd, Assistant United States Attorney, Houston, Tex., for appellee.
Before
RIVES, CAMERON and BROWN, Circuit Judges.
RIVES,
Circuit Judge:
This
appeal is from two judgments of conviction for contempt of court, upon
each of which the appellant received a sentence of six months
imprisonment. The second sentence was to run concurrently with the
first. Each conviction was for the appellant's refusal to obey an order
or orders of the court requiring him to answer certain questions
propounded to him as a witness before the grand jury, notwithstanding
his claim that his answers to the questions might tend to incriminate
him.
In
view of the importance of the matter and at the risk of being prolix, we
set forth at some length the appellant's status in the community, the
setting in which the questions were asked, and the legal procedure. The
appellant was Vice-President and operating head of Balco, Inc., a
corporation engaged in construction work and in the building of roads
and bridges. He had a family consisting of a wife and one child,
belonged to a church in which he took an active part, to one social
club, had never been accused of any crime, nor had he knowingly
associated with criminals. It is against that excellent background and
reputation that the appellant was guilty of conduct so questionable as
to cause him to invoke the protection of the Fifth Amendment.
The
beginning of the controversy was an examination of the income tax
returns of Balco, Inc. in connection with an investigation of "some
third parties." The examining agent, Mr. Taylor, testified,
"There were numerous cash withdrawals made, which if we could not
determine them to have gone to a third party, under such examination
they would have to be constructive dividends to Mr. Ballantyne."
All of these cash withdrawals were on checks made payable to Balco, Inc.
from either the City of
Pasadena
or the City of
LaPorte
,
Texas
. A few relatively small checks were cashed directly without being
deposited to the credit of Balco, Inc., and, during the years 1951, 1952
and 1953, approximately $50,000.00 was withheld from checks which were
deposited, the deposit slips listing the amounts of the checks and the
cash withheld, which was always in round numbers of so many thousand
dollars. The checks were endorsed for the corporation by the appellant,
and the deposit slips were made out in the appellant's handwriting. Mr.
Taylor testified that, "As agent for the corporation he was the
last known person to have custody of the money." He, of course,
called upon Ballantyne for an explanation of the withdrawals.
"Q.
In as near the language as Mr. Ballantyne used, give us everything he
said to you in that respect.
"A.
Quoting as near as I can recall: 'To tell you that I would be ruined
financially. I would have to leave town.'"
Again,
in explanation of three particular items of cash withdrawals, Ballantyne
used only one word "graft."
In
due course, Agent Taylor reported to George A. Stephen, Group Supervisor
of the Intelligence Division of the Internal Revenue Service, stationed
at
Houston
,
Texas
, that Ballantyne had told him that the withdrawals were for graft. Mr.
Stephen testified that, "Mr. Ballantyne's statement to Mr. Taylor
seemed to have a definite relationship" with "certain
information (which) had been brought to our attention by the Internal
Revenue agents concerning possible income of certain individuals,"
and, an "investigation that was already in progress."
Accordingly, Stephen had Ballantyne subpoenaed to testify concerning the
disposition of the withdrawals.
The
Intelligence Division was obviously seeking to ascertain the recipients
of the alleged prior payments and Mr. Stephen testified that they were
not investigating Mr. Ballantyne for income tax fraud. At the same time,
Mr. Stephen conceded that,
"The
only knowledge I have about any bribery at all is the statements Mr.
Ballantyne made when he appeared in our office, and the statement that
Internal Revenue Agent Taylor told me was made to him by Mr. Ballantyne,
that the money had gone for graft payments to city officials."
Ballantyne
was accompanied to this examination by his attorney. Initially, his
attorney explained to the special agent,
"that
he thought he had an out for Mr. Ballantyne in that he could plead the
Fifth Amendment, because it might possibly incriminate him under state
law to testify.
"Q.
What state law, if any, did he make, particular reference to?
"A.
Bribery of public officials."
After
the special agent had explained to the attorney that the Fifth Amendment
to the Constitution did not protect against disclosures of state crimes,
the attorney replied, "Well, there is another possibility that
there might be incrimination for tax evasion."
[Fourth and Fifth Amendments]
Ballantyne
declined to answer any questions as to the disposition of the
withdrawals, on the ground that the answers might tend to incriminate
him, assigning both the Fourth and Fifth Amendments, but did engage in
some off the record conversations.
"Q.
What did Mr. Ballantyne tell you in these off the record remarks during
the time the sworn statement was being taken?
"A.
He told the agents present and made the statement in the--during the
course of the proceedings that he was just a small fish, and that we
weren't after the real parties. That there were other ones that had made
bigger payments than he had ever made, and that type of thing was pretty
universal, and that it would ruin him to furnish any information
concerning any payments of graft."
Mr.
Stribling, another special agent present, remembered the off the record
conversation as follows:
"Q.
Can you tell us in Mr. Ballantyne's own words, as close as possible,
just what he said?
"Q.
Well, he said that such payments were a usual and normal thing; that
they were made from
Washington
on down, and that in order to remain in business competitively that it
was simply necessary for him to do that."
Ballantyne
was next subpoenaed to appear before a federal grand jury at
Houston
,
Texas
, on September 28, 1955. Before the grand jury, he gave his business and
social background and testified that he had no other source of income
except Balco, Inc. The United States Attorney then asked him,
"Q.
All right. Have you reported all of that income?
"A.
I have, yes.
*
* *
"Q.
Have you ever received any little gratuities on the side, any side
pocket payments that went into your pocket, of a hundred dollars or
more, which were not turned over to your accountant and to the best of
your knowledge reported on your income tax return?
"A.
Not that I know of."
Appellant
was then confronted with most of the deposit slips and checks which
disclosed the cash withdrawals. He then declined to testify whether he
kept the cash withheld for his own personal use, or what disposition he
made of it, invoking the Fourth and Fifth Amendments "on the ground
that there is a possibility that it might incriminate me under the
federal laws." When the United States Attorney undertook to require
him to be definite as to what crime he might be prosecuted for,
appellant replied,
"Well,
all right, there is one thing, that one of the federal revenue men did
threaten to hold me responsible for all this money, and prosecute me on
income tax evasion. * * * Well, it is just the--just the federal laws of
perjury. There's ten million of them. You just stated that there are
shelf after shelf of books on it. I don't know; I am an engineer, I am
not a lawyer."
He
also declined to testify concerning his interview with Internal Revenue
Agent Taylor and his subsequent examination before the special agent of
the Intelligence Division of the Internal Revenue Service. He admitted
that Balco, Inc. had performed 12 to 15 contracts with
Pasadena
, the gross amounts of which varied from $2,000.00 to $300,000.00, and
two contracts with LaPorte, and that the checks to Balco, Inc. were
transmitted to him and that he handled the depositing of the checks.
Chief
Judge Magruder for the First Circuit has well pointed out that "The
Congress has not made it a separate and distinct offense for a witness
before a grand jury to refuse to answer any question pertinent to the
matter under inquiry. * * * the grand jury must depend upon the court to
punish contumacious witnesses. The criminal contempt, if it be one, it
contempt of the authority of the court." Carlson v.
United States
, 1st Cir., 209 Fed. (2d) 209, 212, 213.
[Court
Order Requiring Taxpayer to Answer Questions]
Accordingly,
the United States Attorney reported to the court that the appellant had
refused to answer the questions and requested that the court order him
to make answers. At the request of the appellant's attorney, the court
postponed the hearing on that request until the following day, September
29, 1955, at which time the proceedings before the grand jury had been
transcribed. After a very full and patient hearing at which appellant's
counsel introduced the testimony of the Internal Revenue agents,
disclosing substantially the facts which have already been recited, the
court directed appellant to return to the grand jury and answer the
questions. 1
Accordingly,
on the succeeding day, September 30, 1955, appellant was again sworn as
a witness before the grand jury and several of the questions propounded
to him on his previous examination were again asked him, each of which
he refused to answer on the ground that the answer might tend to
incriminate him, invoking the Fifth Amendment. The United States
Attorney then asked him, "If I went through and asked you those
same exact questions verbatim as are shown in the transcript filed in
the Court, would you continue to invoke the Fifth Amendment."
Appellant replied, "I refuse to answer the question on the grounds
that to do so may tend to incriminate and degrade me, and I base my
refusal on the rights of the Fifth Amendment to the Constitution of the
United States
." The United States Attorney then told him,
"Mr.
Ballantyne, it is our opinion that you have refused to obey a lawful and
considered order of the Chief Judge of the District Court for the
Southern District of Texas, in that you have refused to answer the
specific questions or any other questions related thereto, which you
were ordered to answer yesterday."
Accordingly,
on the afternoon of the same day, September 30, 1955, appellant was
again haled before the court, the United States Attorney stating to the
court:
"Mr.
Ballantyne appeared at 11:00 o'clock in response to the Court's order,
but declined to answer any and all questions which he had previously
declined to answer.
"The
government therefore asks that Mr. Ballantyne be charged with criminal
contempt, and after notice and hearing that he be punished for such
criminal contempt by imprisonment in the custody of the United States
Marshal for such definite period of time as the Court may see fit, and
that such definite period of time as the Court sees fit be all or part
of it remitted if Mr. Ballantyne purges himself of his contempt by
obeying the lawful and considered order of the Court.
"The
charge is criminal contempt, for failure to answer the questions before
the grand jury in response to the due and lawful order of the Court. Mr.
Ballantyne is present here with his attorney."
On
the request of appellant's attorney, the hearing was postponed until the
following Tuesday, October 4, with the following colloquy as to the
nature of the hearing:
"Mr.
Wilkey: Your Honor, I will ask the Court to state for the defendant and
his counsel that this proceeding is in the nature of a show cause, for
the defendant to show cause why he should not be cited and punished for
criminal contempt.
"The
Court: Do you understand that, counsel?
"Mr.
Cornish: Your Honor, I understand this would be considered as a civil
contempt matter, although the penalty can be either fine or conviction?
"The
Court: That's right. I don't know that there is any limit as to either
the amount of the fine, if there should be a fine, or the amount of the
imprisonment, if there should be imprisonment. It can't be both; it has
to be one or the other.
"Mr.
Cornish: My understanding is it is a civil proceeding.
"Mr.
Wilkey: Your Honor, there is some confusion here. The charge made by the
government is one of criminal contempt. That is the charge which the
defendant will be called upon to answer on Tuesday.
"The
Court: All right.
"Mr.
Cornish: Is that Your Honor's order, that it is a criminal contempt?
"The
Court: Well, I don't know that it is necessary for me to determine that
now. I will let you argue the question. But regardless of whether it is
criminal or civil, either or both, the setting is definite, the time and
place definite, and the fact that it is a criminal contempt hearing is
something I will determine at that time."
At
the October 4 hearing, appellant appeared with additional consel. He
requested "a clear specification of whether or not, or or ruling as
to whether or not, this is a civil or criminal contempt charge."
The court replied, "Well, you were not present at the time of the
original hearing. Your co-counsel was, and the District Attorney stated
at that time that this was a criminal contempt proceeding."
Appellant's new counsel then stated that though he recognized that under
the rules notification of the charge might be oral, appellant was
entitled to have a clear specification of what questions he was
specifically required by the court to answer and what answers he refused
to make. The court then adjourned the hearing in order that appellant
could be returned before the grand jury and again asked the precise
questions that were asked him in the original hearing.
Again,
appellant went before the grand jury on that same day, October 4, when
all of the questions asked him on the original hearing of September 28
were repeated, and to the material ones he made like responses declining
to answer on the ground that the answers might incriminate him and
invoking the protection of the Fifth Amendment.
On
his subsequent return later in the day before the court, appellant's new
counsel insisted that "this is a different charge than the one we
had beforehand." The United States Attorney took the position that,
"there are several questions in the hearing before the grand jury
on September 30 which are exactly the questions propounded before the
grand jury on September 28, in which those specific questions were asked
in the same words to the defendant," and requested that the court
proceed in its order to answer two of such questions. 2
The
court then directed, "Proceed on that then, without reference to
the other, and without prejudice to the right to bring him back on the
question of what occurred today." At the conclusion of that hearing
the court found appellant guilty of contempt. 3
Formal findings of fact and conclusions of law and a formal judgment and
sentence were thereafter entered. Ballantyne promptly appealed from this
judgment of conviction.
Thereafter,
on October 14, 1955, the Government filed an additional motion for a
show cause order and criminal contempt, which the court granted. 4
As a result of that hearing, the court entered its findings of fact, 5
again found appellant guilty of contempt for disobeying the order or
orders of the court by refusing to answer the questions, and imposed an
additional sentence of six months to run concurrently with the previous
sentence.
As
to this first conviction for contempt, the appellant contends: (1) that
the court did not comply with Rule 42, Federal Rules of Criminal
Procedure, 6
in that it did not "state the essential facts constituting the
criminal contempt charged and describe it as such," (2) that the
appellant was entitled to a jury trial, (3) that, under the protection
of the Fifth Amendment, appellant was not in contempt for refusing to
answer the questions.
As
to his second conviction, the appellant makes the same contentions, and
also that the district court had been deprived of jurisdiction by the
prior appeal to this Court and that the second contempt was barred by
the first.
I.
Sufficiency of the Notice
We
think the record shows adequate and substantial compliance with the
spirit of Rule 42(b) [Footnote (6), supra], and that throughout
each proceeding appellant's counsel was sufficiently informed of the
basis for each charge, both from other pertinent statements of the
court, and by virtue of his admitted possession before each hearing of
the complete transcript of all prior grand jury proceedings made the
basis of the contempt charges. In this posture of the record, and
appellant being charged with knowledge of those questions which he had
refused to answer under claimed protection of his constitutional
privilege, we are constrained to view any lack of technical specificity
by the court in stating the offense as harmless, not affecting
appellant's substantial rights or constituting a deprivation of due
process. 7
II.
Right to Jury Trial
Appellant's
insistence that he was entitled to a jury trial is labeled by appellee
as a "distinct afterthought", and we agree. There was no
demand for a jury as required by the applicable statute, 18
U. S.
C. A. 3691. See Adams v.
United States
, 317
U. S.
269, 275; Couts v.
United States
, 8th Cir., 249 Fed. (2d) 595, 597. Indeed, the issue is raised for
the first time on this appeal. Unless there be a constitutional 8
right to trial by jury in contempt proceedings of this kind which has
not been waived, then the question of appellant's right to jury trial
has not been preserved for review upon this appeal. In any event, that
question is immaterial if we are correct in our holding, presently to be
stated, that, as a matter of law, the appellant was protected by the
Fifth Amendment in his refusal to obey the order or orders of the court
requiring him to answer the questions.
III.
The Merits of Appellant's Claim to the Protection of the Fifth Amendment
A
most difficult question is presented as to how far the court is bound to
recognize the witness' claim that his answers may tend to incriminate
him. The subject is adequately treated in Vol. VIII of Wigmore on
Evidence (3rd ed.) §2271, et seq., where the author notes that the true
rule was first set forth by Chief Justice John Marshall in Aaron Burr's
trial, 1
Rob
ertson's Reports 243, as follows:
`When
two principles come in conflict with each other, the Court must give
them both a reasonable construction so as to preserve them both to a
reasonable extent. The principle which entitles the
United States
to the testimony of every citizen, and the principle by which every
witness is privileged not to accuse himself, can neither of them be
entirely disregarded. They are believed both to be preserved to a
reasonable extent, and according to the true intention of the rule and
of the exception to that rule, by observing that course which, it is
conceived, Courts have generally observed; it is this: When a question
is propounded, it belongs to the Court to consider and decide whether any
direct answer to it can implicate the witness; if this be decided
in the negative, then he may answer it without violating the privilege
which is secured to him by law. If a direct answer to it may
criminate himself, then he must be the sole judge what his answer would
be; the Court cannot participate with him in this judgment, because they
cannot decide on the effect of his answer without knowing what it would
be, and a disclosure of that fact to the judges would strip him of the
privilege which the law allows and which he claims.'" Vol. VIII of
Wigmore on Evidence (3rd ed.) §2271, pp. 405-406.
This
language of Chief Justice Marshall can be consistently reconciled with
the present day Court's expressions in Hoffman v. United States,
341 U. S. 479, and the liberal rule conferring broad protection upon an
accused invoking his constitutional privilege against self-incrimination
applied by this Court in Marcello v. United States, 196 Fed. (2d)
437, and Poretto v.
United States
, 196 Fed. (2d) 392. 9
In
announcing its holding in Hoffman v.
United States
, supra, the Court said: "In this setting it was not 'perfectly
clear, from a careful consideration of all the circumstances in the
case, that the witness is mistaken, and that the answer[s] cannot
possibly have such tendency' to incriminate." 341
U. S.
at p. 488. 10
The
district court referred to appellant's statements to the agents and his
testimony at his first grand jury appearance, and held therefrom that,
in the absence of proof beyond a reasonable doubt to the contrary, the
court must assume that appellant had paid all income taxes due from him.
11
Such prior statements and testimony were, of course, an important part
of the background or setting against which the court must determine
whether his answers could possibly have a tendency to incriminate the
appellant. Of not less importance, however, as a part of such background
or setting, was the fact that appellant asserted both expressly and by
implication that he had sunk so low in the moral scale as to pay graft,
to bribe public officials. Thereby, whether unwittingly wittingly or
not, he shed his cloak of respectability, and proved himself a man of
bad character who might not be above evading his income taxes and
concealing or attempting to conceal his guilt by false or extravagant
claims of graft. Like so many others who hold themselves out as
purchasers of votes or influence or purveyors of bribes, he may have let
the money, or a part thereof, stick in his own pockets. Compare the
similar factual situation in Kiewel v. United States, 8th Cir.,
204 Fed. (2d) 1.
In
our opinion, the appellant was not absolutely concluded by his claims to
the Internal Revenue agent that the withdrawals were for graft. As we
said in Poretto v.
United States
, supra, at p. 394:
"The
constitutional privilege attaches to the witness in each particular case
in which he is called upon to testify, without reference to his
declarations at some other time or place or in some other
proceeding." 12
In
In Re Neff, 3rd Cir., 206 Fed. (2d) 149, 152, it was held that a
waiver of the privilege before the Grand Jury did not carry through to
the subsequent trial. As between appellant's testimony at his first
appearance before the Grand Jury on September 28 in which the United
States Attorney extracted from him the general answers that he had
reported all of his income and did not know of any additional
"little gratuities on the side, any side pocket payments that went
into your pocket," and his subsequent testimony before the Grand
Jury on September 30, and again on October 4, the cleavage is possibly
not so clear, though on each appearance he was sworn anew. In any event,
the United States Attorney could not, by thus skillfully securing from
appellant a general claim of innocence, preclude him from thereafter
relying upon his constitutional privilege when confronted with specific
withdrawals. Apt to such a situation is the language of the Supreme
Court in Emspak v. United States, 349
U. S.
190, 198: "To conclude otherwise would be to violate this Court's
own oft-repeated admonition that the courts must 'indulge every
reasonable presumption against waiver of fundamental constitutional
rights.'"
The
government's assumption, concurred in by the district court, that the
appellant was concluded by his statements to the agent and his testimony
at the first Grand Jury appearance, would effectively beg the question
as to whether it was perfectly clear that the answers cannot
possibly have a tendency to incriminate the appellant for violation
of the tax evasion statutes, 26 U. S. C. A. 145, I. R. C., 1939.
Clearly, if appellant lied to the agent and later to the Grand Jury, and
that is quite possible, then appellant, instead of, or perhaps along
with, some hypothetical dishonest official or officials, is guilty of
crime which his answers would disclose. We think that that possibility
must be taken into consideration in ruling upon appellant's claim of
protection under the Fifth Amendment.
[Taxpayer's
Answers Might Tend to Incriminate]
Appellant's
counsel lists many other statutes of which he claims that appellant
might reasonably have apprehended self-incrimination. 13
We need not make a detailed examination of such various possibilities,
for it seems clear to us that his answers truthfully made might have
proven him criminally responsible for violating income tax laws. That
being true, the Fifth Amendment afforded him a haven of refuge however
dishonest he may have been, for the privilege extends to the guilty as
well as the innocent. Helton v.
United States
, 5th Cir., 221 Fed. (2d) 338, 342. The judgments are, therefore,
reversed with directions that the appellant be discharged. REVERSED.
1
"The Court:
"Well,
under the state of the record I believe the case more nearly in point is
the case of Brown v. Walker, 161 U. S. 591, in which the Court
held that every good citizen is bound to aid in enforcing the law, and
he has no right to use his privilege to shield others under the pretext
of protecting his name.
"So
believing, why, I will order the witness, R. C. Ballantyne, to appear
before the grand jury of the Southern District of Texas here in this
court house, I believe on the third floor, at 11:00 o'clock tomorrow
morning, and answer questions that have been propounded to him and set
forth in the transcript of the testimony, of his testimony, before that
body, which is a matter of record in this hearing at this time.
"Is
that clear, Mr. Ballantyne?"
2
"Q. Mr. Ballantyne, on that occasion you were interrogated in
regard to a deposit slip identified as Grand Jury Exhibit 1, in the
amount, the gross amount of $18,552.60, with the notation 'less cash,
$5,000.00,' then the next deposit, $13,552.60; and in regard to that
deposit slip and the five thousand dollar item thereon, you were asked:
`In
regard to the five thousand dollar item, sir, did you yourself keep that
for your own personal use?'
"I
am asking you that question again, sir. What is your answer?
"A.
I refuse to answer the question on the grounds that to do so may tend to
incriminate and degrade me, and I base my refusal on the rights of the
Fifth Amendment to the Constitution of the
United States
.
"Q.
It is true, is it not, that at the time you were interviewed by the
Internal Revenue agents, you, on either this or other deposit slips
similar thereto, you emphatically denied that you personally had kept
the cash items listed on the deposit slips? Is that not correct?
"A.
I refuse to answer that question on the ground that to do so may tend to
incriminate and degrade me, and I base my refusal on the rights of the
Fifth Amendment to the Constitution of the
United States
."
3
"I find beyond a reasonable doubt that you, Ray C. Ballantyne * * *
willfully, deliberately and not in good faith disobeyed the order of
this Court in refusing to answer certain questions asked you in a proper
proceeding before the grand jury of this district and this division now
in session.
"I
further find that said questions and each of them asked of the said
Ballantyne, particularly the two in question here, presented no real,
reasonable or real danger of further incrimination.
"I
therefore find the said Ray C. Ballantyne in criminal contempt of this
Court, and hereby commit him to the custody of the United States Marshal
of the Southern District of Texas for imprisonment for a period of six
months.
"Committed."
4
"Ordered that Ray C. Ballantyne appear before this Court at 10 a.
m. o'clock, 31 October 1955, and show cause why the said Ray Co.
Ballantyne should not be held in criminal contempt for the reason that
the said Ray C. Ballantyne did willfully, deliberately, and not in good
faith disobey the considered and lawful orders of this Court made on
September 29, 1955, and October 4, 1955, by refusing to answer certain
questions asked him in a proper proceeding before the Grand Jury of this
District and Division now in session, the said questions, having been
previously asked the said Ray C. Ballantyne on September 28, 1955, and
the Court having found after the notice and hearing on September 29,
1955, that the said questions, and each of them, asked of the said
Ballantyne, presented no reasonable or real danger of incrimination. And
in furtherance thereof, it is * * *."
5
"On October 4, 1955, the witness Ray C. Ballantyne appeared before
the grand jury at Houston, Texas, in response to subpoena and orders of
the Court issued September 29th and October 4th, and thereupon refused
to answer twenty questions propounded to him, which had been previously
asked him on September 28th. On that day the witness originally refused
to answer twenty-six questions. Two of these were reasked on September
30th, and on these I ruled October 4th. Four of the original twenty-six
the witness answered before the grand jury on October 4th, but to twenty
questions on which I am now ruling he refused to answer. The text of the
twenty questions and (numbered as in the original Grand Jury transcript)
answers are as follows: * * *."
6
"Rule 42. Criminal Contempt
"(a)
Summary Disposition. A criminal contempt may be punished
summarily if the judge certifies that he saw or heard the conduct
constituting the contempt and that it was committed in the actual
presence of the court. The order of contempt shall recite the facts and
shall be signed by the judge and entered of record.
"(b)
Disposition Upon Notice and Hearing. A criminal contempt except
as provided in subdivision (a) of this rule shall be prosecuted on
notice. The notice shall state the time and place of hearing, allowing a
reasonable time for the preparation of the defense, and shall state the
essential facts constituting the criminal contempt charged and describe
it as such. The notice shall be given orally by the judge in open court
in the presence of the defendant or, on application of the
United States
attorney or of an attorney appointed by the court for that purpose, by
an order to show cause or an order of arrest. The defendant is entitled
to a trial by jury in any case in which an act of Congress so provides.
He is entitled to admission to bail as provided in these rules. If the
contempt charged involves disrespect to or criticism of a judge, that
judge is disqualified from presiding at the trial or hearing except with
the defendant's consent. Upon a verdict or finding of guilt the court
shall enter an order fixing the punishment."
7
Compare
United States
v. Mine Workers, 330
U. S.
258, 296; In Re Michael, 3rd Cir., 146 Fed. (2d) 627, 628, rev.
on other grounds, 326
U. S.
224;
United States
v. Patterson, 2nd Cir., 219 Fed. (2d) 659, 662, n. 4 [55-1 USTC
¶9189]; International Union, Etc. v.
United States
, C. A. D. C., 177 Fed. (2d) 29, 36.
8
See the dissenting expressions of Mr. Justice Black, concurred in by Mr.
Justice Douglas, in Sacher v. United States, 343 U. S. 1, 20, 89,
and as tending to the opposite persuasion see In Re Debs, 158 U.
S. 564, 594; Bessette v. W. B. Conkey Co., 194 U. S. 324, 326; Myers
v. United States, 264 U. S. 95, 103; Michaelson v. United States,
266 U. S. 42; Ex parte Grossman, 267 U. S. 87, 117, 118; United
States v. Mine Workers, 330 U. S. 258, 298.
9
During the intervening years from Chief Justice Marshall's decision in
Aaron Burr's case until the advent of Hoffman v. United States,
341
U. S.
479, and cases in accord, the Court appears to have departed in numerous
instances from any such broad construction of the privilege. See and
compare, Brown v. Walker, 161
U. S.
591, 599-600; Mason v. United States, 244
U. S.
362; Rogers v. United States, 340
U. S.
367; Blau v. United States, 340
U. S.
159.
10
It should be noted that the emphasis is that of the Court itself.
11
"This, in my opinion, constitutes a specific denial under oath that
the witness Ballantyne personally kept or received the benefit of the
corporation funds represented by the 'less cash' items. As such, it
confirms his previous statements made to the revenue agents that the
'less cash' items went, not to himself, but to certain unnamed
individuals for 'graft'.
"Unless
I assume the witness Ballantyne guilty of perjury before the Grand Jury,
I must assume that he has paid his income taxes for the years in
question, that he himself did not personally keep or receive the benefit
of the unexplained cash withheld. Legally, since I did not hear this
testimony, I must believe he told the truth while under oath unless
proven to me beyond a reasonable doubt that he did not. No man is
assumed guilty of perjury, to the contrary he is presumed innocent
unless proven guilty.
"That
being so, considering along with his previous statements to the agents,
* * *."
12
See also, Marcello v. United States, 5th Cir., 196 Fed. (2d) 437,
445;
United States
v. Steffen, D. C. Cal., 103 Fed. Supp. 415.
13
Violation of the Statute requiring informational returns, Sec. 147, I.
R. C. 1939; violation of the False Statements Statute, Title 18, U. S.
C. A. Sec. 1001; violation of the Conspiracy Statute, Title 18, U. S. C.
A. Sec. 371; violation of the provisions of the Aider and Abettor
Statute, Title 18, U. S. C. A. Sec. 2; and violation of the Specific
Aider and Abettor Statute of the Internal Revenue Code, Sec. 3793, 1939.
Violation of the Gift Tax Statute, I. R. C., Sec. 1006 and Sec. 1024(a)
and (b); violation of the Verification of Returns Statute, I. R. C.
3809; incurring the fraud penalty under I. R. C., 1939, Sec. 293(b).
Violation of 18 U. S. C. A. 1621, General Perjury Statute.
CAMERON,
Circuit Judge, Concurring in Part and in Part Dissenting:
I
concur in the reversal of the judgments of the Court below, but not in
the discharge of appellant nor the reasons upon which that action is
based in the majority opinion. I would remand the case for trial by
jury.
I.
If the Judge had jurisdiction to try appellant, I think his findings are
amply supported by the evidence. In the contempt hearings before him the
Government introduced only the transcripts of appellant's testimony
before the grand jury. That testimony, standing alone, would, in my
opinion, have sustained a finding by the trial Judge that appellant had
no cause to fear prosecution for income tax evasion or to apprehend that
the answers he refused to give would tend to incriminate him of such a
charge.
Appellant,
himself, introduced as his witnesses three agents of the Internal
Revenue Service and proved by them that appellant and his lawyer had
freely stated to them that the money in question was not his money and
was not retained by him; but was paid by him as an agent of Balco, Inc.
to certain city officials to reward them for employing Balco in
connection with certain public works. In the various conferences
preceding presentation to the grand jury both appellant and his lawyer
staked reliance solely upon the claim that the questions, if answered,
would tend to make appellant liable to prosecution for violation of
state laws, and the claim of possible federal involvement was not made
until the invalidity of the former claim had been pointed out by the
federal officials.
The
showing before the District Judge was strong indeed and he was fully
justified in reaching the conclusions of fact announced by him. But I do
not think he had jurisdiction to try the fact issues, but think they
should have been submitted to a jury.
II.
The trial Judge, sitting as judge of the facts and the law, found
appellant guilty of acts which violated not only the Court's order, but
federal statutes 1
as well as state statutes, e.g. 1 Vernon's Texas Penal Code, Art. 158,
160, 167. So finding, he entered judgments taking appellant's liberty
from him. It is abhorrent to Anglo-Saxon justice as applied in this
country that one man, however lofty his station or venerated his
vestments, should have the power of taking another man's liberty from
him.
Society
has always permitted one exception,--the limited right of courts to
punish for contempts. But that exception has been grudgingly granted, 2
and has been held down uniformly to the "least possible power
adequate to the end proposed." 3
III.
The limitations of that power have been drawn closer and closer through
the years and it is clear now that a judge can impose imprisonment for
contemptuous conduct which constitutes also a crime only when such
conduct takes place in his presence. The early decisions of the Supreme
Court 4
were disposed to lodge broader powers in the judge; but a study of the
history of contempt trials and the more recent decisions reveals that
all agencies dealing with contempt procedures have combined in a steady
progress towards stricter limitations upon the power of judges to punish
contempts and broader observance of accused's constitutional rights.
IV.
(a) The power of American Courts to punish contempts, frequently
referred to as inherent, sprang from the practice in English Courts in
effect when the Constitution was adopted. That practice has uniformly
relegated to "the usual criminal procedure" charges of
disobedience of court orders constituting also "infractions of the
law." 5
The history which gave rise to the constitutional provisions
guaranteeing the right of trial by jury "is succinctly summarized
in the Declaration of Independence, in which complaint was made that the
Colonies were deprived 'in many cases, of the benefits of Trial by
jury.'" 6
(b)
The Constitution provides, 7
"The Trial of all Crimes . . . shall be by jury . . ." But
those fresh from experiences with tyranny were not content with this
general guarantee, and Amendments VI and VII were promptly adopted, the
former providing: "In all criminal prosecutions, the accused
shall enjoy the right to a speedy and public trial by an impartial jury
. . ." [Italics added.] The concept of a criminal
"prosecution" is broader than a "trial" and the
addition of the more inclusive term indicates a determination to afford
the right of trial by jury to those subjected to prosecution of any sort
which might result in fine or imprisonment. 8
The selection of the language of the Sixth Amendment is hardly
explainable upon any other postulate.
(c)
The history of legislation on the subject has demonstrated a deliberate
and consistent "congressional purpose drastically to curtail the
range of conduct which courts could punish as contempt." 9
And, on the same page, the Supreme Court pointed out that the attitude
of Congress and of that Court in recent years had shown a definite
determination to adhere to the thesis: "The exercise by federal
courts of any broader contempt power than this would permit too great
inroads on the procedural safeguards of the Bill of Rights and leave
determination of guilt to a judge rather than a jury."
The
Judiciary Act of 1789 10
conferred on courts the general power to punish for contempts, the
language being the substantial equivalent of that now embraced in 18
U.S.C.A. 401. Abuses arose under that Act 11
leading Congress to pass the Act of March 2, 1831 (fn 1, supra)
wherein a second section was added which subsequently became a part of
the Criminal Code and now constitutes 18 U.S.C.A. §1503 and §1505. The
Nye case establishes that this action of Congress manifested the
purpose of relegating a broad category of offenses theretofore dealt
with as contempts to the normal processes of criminal trials.
The
Clayton Act of October 15, 1914, 12
as if adopting the evolution manifested by the two Gompers
decisions, 13
specifically provided trial by jury to persons coming within the purview
of that Act 14
when charged with violation of court decrees where the acts constituted
also violation of criminal laws. And the Norris-LaGuardia Act of 1932 15
broadened further the scope of jury trials in labor cases. Finally, by
passage of the Federal Rules of Criminal Procedure 16
and the new Criminal Code of 1948, 17
Congress, using the language of the Clayton Act, has provided
specifically for jury trial in all contempt prosecutions, civil and
criminal, based upon violation of a court order, provided "the act
or thing done or omitted also constitutes a criminal offense . . ."
It
is also noteworthy that Congress requires that all prosecutions for
contempt of Congress be by indictment or information and trial under the
usual safeguards of ordinary criminal cases. 18
(d)
The Supreme Court has kept pace with Congress in drawing closer and
closer the boundaries of the categories of contempt prosecutions which
can be tried without observance of all of the safeguards of the Bill of
Rights, including the right of trial by jury. We discussed some of those
cases in Matusow, supra, and reversed for failure of the Court
below to observe the provisions of the Bill of Rights in the conduct of
contempt trial. 19
Mr.
Justice Holmes had blazed the trial towards dealing with contempt
charges involving crimes as ordinary criminal cases, in the second Gompers
decision. 20
And the Supreme Court, in 1941 21
declared that the prior decisions discussed in the case had been based
upon "a plain misreading of language and history . . ." Ever
since that epochal decision the Supreme Court has, without exception,
followed and added strength to the rule requiring "meticulous
regard for those separate cagegories of offenses . . ., so that the
instances where there is no right to jury trial will be narrowly
restricted. 22
V.
(a) While the majority opinion does not decide the question of right to
jury trial, it expresses some doubt as to whether appellant had not
waived the right for failure to file a request therefor. But, as stated
in the majority quotation from Emspak v. United States, 349
U. S.
190, 198, "the courts must 'indulge every reasonable presumption
against waiver of fundamental constitutional rights.'" Appellee
here does not contend that appellant waived his right to jury trial,
arguing the question on the merits although referring to it as an
after-thought. The fact is that appellant was never given the chance to
accept or reject a jury, but was put to trial at a time when his counsel
was pleading for delay in order that more complete preparation might be
made. There was no waiver under established principles. 23
(b)
Except for the proviso at its end that it does not apply to cases
brought or prosecuted in the name of the United States, appellant would
be entitled to a jury trial under the express terms of 18 U.S.C.A.
§3691. But, under identical language, the Supreme Court held that trial
by jury was mandatory in a suit brought in the name of the United
States, Michaelson v. United States, 1924, 266 U. S. 42; and cf. Gompers
and Nye, supra, both prosecuted in the name of the United States.
Moreover,
a strange incongruity would be presented if it should be held that
protection of the Bill of Rights should be withheld from a litigant
contesting with the sovereign against whose activities its terms are
specifically directed, while that protection is categorically vouchsafed
to a litigant at grips with a private adversary. 24
(c)
A situation such as is here presented makes a peculiar call for trial of
contempt charges by a fact-finder other than the author of the order the
accused is charged with disobeying. What the Supreme Court said in Murchison,
supra (pp. 136-7), about the necessity of avoiding even the
probability of bias applies here as does its quotation (ib.) from Offutt
that "justice must satisfy the appearance of justice." It
transcends recognized frailties of human nature to suppose that a judge
can be free from the inclinations arising from natural pique which would
be engendered by a direct refusal by the accused to obey an order
freshly made by him, and the temptation to strike back which inevitably
accompanies reffled pride. Doubtless such considerations are among the
factors which included Congress to give special treatment to hearings
which involve charges of violating court orders. Cf. 18 U.S.C.A. §402
and §3691.
VI.
In my opinion we ought to dispose of this appeal upon this procedural
question rather than to reverse a finding of fact by the trial Judge
which tends to leave the Government in a state of impotence in its
efforts to detect and punish crime.
1
e.g. 18
U. S.
C. A., 1948, §1503 and 1505 and cf. Wilder v. United States, 4
Cir., 1906, 193 Fed. 433), which statutes originated as §2 of the Act
of March 2, 1831, 4 Stat. 487, Rev. Stat. 725, which was the Contempt
Act upon which most of the decisions of the Supreme Court have been
based. §1 of that Act is now 18
U. S.
C. A. §401. And cf. also the Conspiracy Statute, 18
U. S.
C. A. §371, and the Perjury Statutes, 18
U. S.
C. A. §1621 et seq.
2
Matusow v.
United States
, 5 Cir., 1955, 229 Fed. (2d) 335.
3
Cammer v.
United States
, 1956, 350
U. S.
399, 404.
4
Including those listed in fn. 8 of the majority opinion.
5
Mr. Justice Holmes in the second Gompers case, 233
U. S.
604, 610-11.
6
Adams v.
United States
, 1942, 317
U. S.
269, 276.
7
Article III, Section 2, Cl. 3.
8
"Criminal Case" as used in the Fifth Amendment providing that
no person shall be compelled to be a witness against himself in any
criminal case has been construed generally to include every sort of
proceeding which might lead to taking a person's liberty. See "The
Fifth Amendment", by R. Carter Pittman, 42 A. B. A. Journal 509.
9
Cammer, supra, 350
U. S.
at 404.
10
1 Stat. 73, 83.
11
For a full discussion of these abuses and the history of the Contempt
Statutes see Nye v. United States, 313
U. S.
33, 45 et seq.
12
38 Stat. 738.
13
221
U. S.
418, 1911, and 233
U. S.
604, 1914.
14
The Court of Appeals in Michaelson v.
United States
, 1924, 291 Fed. 940, 949, stated that the Act was written by the
labor unions for the purpose of affording special protection to that
group.
15
47 Stat. 70, now 18
U. S.
C. A. §3692.
16
Cf. Rule 42 F. R. Crim. Procedure.
17
18
U. S.
C. A. §401, 402, and §3691.
18
2
U. S.
C. A. §192.
19
The Government concedes in its brief in this case that Matusow was
entitled to jury trial, but attempts to distinguish this case from
Matusow's.
20
Gompers v.
United States
, 1914, 233
U. S.
604.
21 Nye, supra,
313 U. S. at 51.
22
No case decided since Nye has shown any tendency to slow down or
reverse the steps by which the current trend has been established. United
States v. United Mine Workers, 330
U. S.
258, 1947, does not conflict with that statement. It was there pointed
out specifically that the claim of right to jury trial was based
entirely on the assertion there rejected that the trial was governed by
the Norris-LaGuardia Act. It was further stated that advisory jury was
waived.
The
following cases further develop and strengthen the quoted principle: In
re Michael, 1945, 326 U. S. 224; In re Oliver, 1947, 333 U.
S. 257, 274 et seq.; Sacher et al. v. United States, 1952, 343 U.
S. 1, and dissenting opinions pp. 14 et seq.; Offutt v. United
States, 1954, 348 U. S. 11; In re Murchison et al., 1955, 349
U. S. 133.
23
Cf. Adams v.
United States
, 317
U. S.
269, and Rule 23(a), Federal Rules Criminal Procedure.
24
After providing that a person wilfully disobeying a court order shall be
prosecuted under §3691--that is, with jury trial--where the act done is
of such character as to constitute also a criminal offense under federal
or state law, 18 U. S. C. A. §402 provides:
"Such
fine shall be paid to the
United States
or to the complainant or other party injured by the act constituting the
contempt, or may where more than one is so damaged, be divided or
apportioned among them as the Court may direct. . . ."
[62-1
USTC ¶9364]Grant et al. v.
United States
Supreme
Court of the
United States
, No. 297, 4/2/62, Vacating and remanding CA-2, with instructions to
dismiss appeal, 61-2 USTC ¶9525
[1954 Code Secs. 7201-7203]
Criminal proceedings: Pre-indictment motion to suppress evidence:
Appealability.--A judgment denying a pre-indictment motion to
suppress evidence in future criminal proceedings arising from an
investigation by the Internal Revenue Service was not appealable. DiBella,
369
U. S.
121, followed.
Joseph
W. Burns, Austin, Burns, Appell & Smith, 535 5th Ave., New York, N.
Y., George Bond, Jr., Bond, Schoeneck & King, State Tower Bldg.,
Syracuse, N. Y., for petitioners. Archibald Cox, Solicitor General,
Louis F. Oberdorfer, Assistant Attorney General, Joseph Kovner, K.
William O'Connor, Department of Justice, Washington 25, D. C., for
respondent.
PER
CURIAM:
The
petition for writ of certiorari is granted. The judgment of the United
States Court of Appeals for the Second Circuit [61-2 USTC ¶9525] is
vacated and the case is remanded to that court with instructions to
dismiss the appeal. DiBella v.
United States
, 369
U. S.
121.
[61-2
USTC ¶9525]Luther F. Grant and Sirrka V. Grant, Petitioners-Appellants
v.
United States of America
, Defendant-Appellee
(CA-2),
U. S. Court of Appeals, 2nd Circuit, No. 26785, 291 F2d 227, 6/19/61,
Aff'g an unreported District Court decision
[1954 Code Sec. 7203]
Crimes: Information obtained in income tax investigation: Suppression
of evidence: Illegal demand for self-incrimination.--A statement
made to the taxpayer, by a special agent, at a point where an income tax
investigation had shifted from an audit of civil liability to a search
for evidence of fraud, to the effect that, "New, you don't have to
give me this information, but we can get it anyway," did not amount
to an illegal demand for self-incrimination. Accordingly, a District
Court properly dismissed taxpayers' petitions to suppress from the grand
jury the evidence from the information so obtained on the ground that
taxpayers had failed to show any affirmative misrepresentation, fraud,
deceit, or scheme to defraud.
Joseph
W. Burns, 535 Fifth Ave., New York 17, N. Y. (John P. Cuddahy, and
Austin, Burns, Appell & Smith, 535 Fifth Ave., New York 17, N. Y.,
and George Bond, Jr., N. Earle Evans, Jr., and Bond, Schoeneck &
King, 1000 State Tower Bldg., Syracuse, N. Y., on brief), for
petitioners. Edward J. McLaughlin, Assistant United States Attorney,
Syracuse, N. Y. (Justin J. Mahoney, United States Attorney, Syracuse, N.
Y., on brief), for defendant.
Before
WATERMAN, MOORE and SMITH, Circuit Judges.
SMITH,
Circuit Judge:
Taxpayers
moved prior to indictment to suppress evidence obtained from them by
Internal Revenue Agents in investigation of their income tax returns for
1952, 1953 and 1954. After hearing, the District Court relying on Sclafani
(United States v. Sclafani, 2 Cir. 1959 [59-1 USTC ¶9357], 265 F.
2d 408, cert. denied 360 U. S. 918), denied relief for failure to show
any affirmative misrepresentation, fraud, deceit or some scheme to
mislead. See also two prior decisions on procedural issues in this case.
282 F. 2d 165 [60-2 USTC ¶9629], 283 F. 2d 582 [60-2 USTC ¶9784].
The
investigation and audit of Dr. Grant's income tax returns for the yrar
1953 were originally undertaken on May 26, 1955 by Internal Revenue
Agent Morris S. Solomon. After Solomon's resignation, the audit was
reassigned in January 1956 to Internal Revenue Agent A. R. Aiello, and
was later expended to include 1953 and 1954. During the course of the
investigations, waivers were obtained from Dr. Grant and his wife from
time to time in order to toll the running of the statute of limitations.
On the third occasion, Dr. Grant requested a waiver of interest, but
when told that could not be granted, signed the waivers anyway. On
January 30, 1957 Special Agent Howland of the Intelligence Division
entered the case to determine whether fraud was involved. He was
introduced to Dr. Grant as a special agent. Thereafter the investigation
was joint, the Audit Division and the Intelligence Division cooperating
under the direction of the Intelligence Division. Log books of Dr. Grant
for the years 1952-54 and cancelled checks on two banks for the same
years were turned over by Dr. Grant or by his employees on his
instructions to Special Agent Howland on September 16, 1958 and returned
November 19, 1958. Checks of Dr. Vuornos (Mrs. Grant) for the same years
were turned over to Howland on January 15, 1959. Howland signed a
receipt on September 16, 1958 as "Special Agent, Intelligence
Division." This receipt was given to Dr. Grant, according to Mrs.
Zalkauskas. On April 13, 1959 Dr. Grant wrote to Howland as
"Special Agent, Intelligence Division." By letter of June 3,
1959 Dr. Grant was advised that criminal proceedings against him were
being considered. He testified that this development was a surprise and
shock to him. He also testified that the records had been turned over
under the impression that it was his duty to do so.
No
summons had been issued and the only written demand for records was in
the letter of the Internal Revenue Agent in the early, civil, stage of
the investigation, calling upon the taxpayer to have all books and
records available for examination. There is no evidence that reference
was made to the statute, Section 7602 of the Internal Revenue Code of
1954. Apparently petitioners contend that a remark of Howland's, which
as Dr. Grant recalled it, was "Now, you don't have to give me this
information, but we can get it anyway," amounted to an illegal
demand for self-incrimination. It may be, however, that the special
agent was attempting to inform the taxpayer of his right to withhold
information now that the investigation had shifted from audit of civil
liability to search for evidence of fraud. It would of course be far
preferable, so that it may be made certain that the choice of the
taxpayer be an informed choice, that written warning be given when the
civil audit is suspended as such, and the investigation becomes one to
determine whether criminal or civil fraud penalties should be sought by
the government. This would not only protect the taxpayer's
constitutional rights, but also obviate much of the delay in tax cases
caused by such motions as the one before us.
Two
questions were raised by petitioners, compulsory self-incrimination in
violation of the Fifth Amendment, and unreasonable search and seizure in
violation of the Fourth Amendment. The court found that there was
nothing to show any affirmative misrepresentation, fraud, deceit, or
scheme to defraud, and dismissed the petition to suppress the evidence.
On the showing made here, this finding was clearly correct.
The
disclosures here were apparently quite willing, although possibly in
ignorance of rights. Even the possible ignorance of rights is highly
doubtful in view of the special agent's statement that petitioner did
not have to give the information, and of petitioner's admission, R. p.
163, that Henry Solomon may have told him in 1958--and he had talked
with Henry Solomon prior to April 15, 1958--that what they were trying
to do was put him in jail. To be sure, he later testified on redirect
that his memory was refreshed by a Medical Economics Journal shown him
by his counsel, which led him to place the date after February 29, 1960.
There is no evidence that any search was made by the agents. The records
taken were produced on request, either by the taxpayer personally, or by
employees of the taxpayer under taxpayer's instructions.
Petitioner
differentiates this case from Sclafani in that here proof was
adduced of the distinct nature and function of the Special Agent and of
the criminal investigation aspect which the case took after his entry
into the picture. This of itself is not sufficient to change the result
here, cf. Turner v. United States, 4 Cir. 1955 [55-1 USTC
¶9489], 222 F. 2d 926, although it may be a factor in determining
whether the records were obtained by fraud. United States v. Wolrich
[55-1 USTC ¶9237], 129 F. Supp. 528, S. D. N. Y. 1955.
[Privilege
Against Self-Incrimination]
One
difficulty with the claim that entry into the criminal investigation
makes production of records thereafter compulsory self-incrimination is
that the privilege does not first arise at that time, but exists in the
earlier civil audit stage of the investigation, and if not claimed, must
be considered "waived" as to material then produced. Strictly
speaking, of course, there is seldom any true waiver, for at the
inception of the civil audit criminal proceedings are not under active
consideration by either agent or taxpayer. If the disclosure is
voluntary, however, the records turned over in the civil audit may be
used without restriction. The situation was materially different during
the period ending in 1952, when the practice of a grant of immunity for
voluntary disclosure was the motive for the production of records. In
cases arising during that period, the issue was whether the voluntary
turnover antedated the beginning of the investigation.
Our
attention has not been called to any, federal or state precedent in
other fields for a requirement of warning of possible prosecution on a
request by criminal investigators for information prior to appearance
before a committing magistrate, so long as no coercion is claimed. Wilson
v. United States, 162
U. S.
613, Turner v.
United States
, supra, at 931.
Since
there was no search established, and no compulsion could well be found
on the showing made, we do not have plainly presented any question of
waiver of the constitutional prohibitions against unreasonable search or
against compulsory self-in-crimination. On a more complete showing at
the trial the picture may, of course, be substantially changed. The
judgment dismissing the petition is affirmed.
[50-2
USTC ¶9497]United States of America, Plaintiff v. John Mangiaracina,
also known as Johnny Mag, Defendant
In
the District Court of the United States for the Western District of
Missouri, No. 17780, August 2, 1950
Penalties: Incrimination before grand jury: Sufficiency of
indictment: Motion to dismiss overruled.--Taxpayer's motion to
dismiss an indictment was overruled where his testimony before a grand
jury did not tend to incriminate him. Even so, however, his remedy was
to stand on the Fifth Amendment. In the alternative, the averment that
the indictment failed to state sufficient facts to constitute a
violation of Code Sec. 145(b) did not show that taxpayer was misled,
where he pointed out that it was drawn more particularly under Code Sec.
145(a).
John
H. Mitchell, Special Assistant to the Attorney General, Washington D.
C., for government. James Daleo, 711 Commerce Bldg., and James J.
Waters, 712 Commerce Bldg., both of
Kansas City
,
Missouri
, for defendant.
Memorandum
Opinion on Motion to Dismiss
REEVES,
District Judge:
The
motion to dismiss is in two parts. First, it is very comprehensive in
asking for the dismissal of all of the counts in the indictment on the
grounds:
"(a)
That the defendant was required by a subpoena to appear before the Grand
Jury as a witness; * * * was examined and required to testify to matters
and things relating to and material to the charge made in the indictment
against him, * * *
"(b)
In the alternative, "* * * averments of the motion are directed
against Count I of the indictment on the ground that' * * * it fails to
state sufficient facts to constitute a violation of Section 145(b), 26
U. S.
C. (Internal Revenue Code)."
On
the first part of the motion counsel rely upon Camarota v. United
States, 111 Fed. (2d) 243;
United States
v. Edgerton, 80 Fed. 374, as well as Counselman v. Hitchcock,
142
U. S.
547. On the second part of the motion reliance is had on the language of
paragraph (a) of the statute and cited decisions of the Supreme Court.
All will be considered.
[Taxpayer's
Testimony Before Grand Jury Did Not Tend to Incriminate Him]
In
their brief supporting the motion to dismiss counsel employ this
language concerning defendant's appearance before the grand jury:
"He
was interrogated about numerous matters which appeared to involve other
persons, but not himself. The defendant answered the questions put to
him. He claimed no privilege not to testify."
1.
The law is clear in its application to facts as above states. In
United States
v. Benjamin, 120 Fed. (2d) 521, the Court of Appeals for the
Second Circuit, by Judge August N. Hand, announced applicable principles
in similar situations. Said Judge Hand:
"It
is to be remembered that the appellant had not the constitutional
privilege to refuse to testify which belongs to a defendant on trial. He
was subject to call as a witness and only had the right of any witness
to decline to give answers when interrogated which might tend to
incriminate him. (Italics supplied.) O'Connell v.
United States
, 2 Cir. 40, Fed. (2d) 201, 205; Muloney v.
United States
, 1 Cir., 79 Fed. (2d) 566. As Professor Wigmore has said, the
privilege is 'an option of refusal and not a prohibition of inquiry.'
Wigmore Evidence 2d Ed., Section 2268."
In
O'Connell v.
United States
, 40 Fed. (2d) 201, l. c. 205, the Court of Appeals, Second Circuit,
through Judge Swan said:
"The
final contention of the appellant is that, regardless of the details of
his examination, it was a violation of his rights under the Fifth
Amendment to require him to be sworn and examined before the grand jury,
because its investigation, though ostensibly general, was in reality an
attempt to secure from his own mouth evidence upon which to indict
him."
While
the court said:
"Some
judicial support may be found for such a view," yet "it has
not prevailed generally.
United States
v. Price, 163 Fed. 904 (C. C. S. D. N. Y.);
United States
v. Kimball, 117 Fed. 156 (C. C. S. D. N. Y.); * * *"
The
court then quoted from Wigmore on Evidence as hereinbefore set out, in
excerpt from
United States
v. Benjamin, supra, and then used this significant language:
"Were
it otherwise, any suspect would be sacrosanct, and witnesses most likely
to know the facts could refuse any aid to an investigation of the crime.
The mere summoning of a witness before the grand jury gives no basis
for the assumption that his constitutional privilege will be impaired.
His duty is to answer frankly until some question is propounded, the
answer to which might tend to self-incrimination." (Italics
supplied.)
Obviously
there was no violation of the Fifth Amendment in the examination of the
defendant before the grand jury. See also Memorandum and Order of one of
my associates, Honorable Albert A. Ridge, in case No. 17803, entitled United
States v. Hoelzel, dated July 24, 1950.
The
case of Counselman v. Hitchcock, 142
U. S.
547, does not aid the defendant. In that case the witness was punished
for contempt by the trial court or the judge calling the grand jury. The
trial judge had issued an order upon the witness to answer questions,
after being apprized of his refusal on the ground that his answers would
tend to incriminate him. The Supreme Court, on an application for a writ
of habeas corpus, upheld the witness by stating that it was obvious that
the answer would tend to incriminate him.
The
case of Camarota v. United States, 111 Fed. (2d) 243, in like
manner, does not support the contention of the defendant. It was there
held that a witness before a grand jury may claim privilege of silence
only if the court finds there is reasonable ground to apprehend that
direct answer to a question may place him in a real and substantial
danger of incrimination. The case of
United States
v. Edgerton, supra, has never been followed.
By
statement of facts here, no question was asked of the defendant which
would tend to have the direct and immediate effect of incriminating him,
but, even so, his remedy was to stand on the Fifth Amendment and not now
to move for the dismissal of the indictment.
[Indictment
Sufficient Under Code Sec. 145(b)]
2.
The second part of the motion challenges Count I of the indictment. It
is to be noted that the indictment, while it uses the language of
paragraph (a) of said section 145, yet it is sufficient under paragraph
(b). Count I, among other averments, contains the following:
"*
* * the said John Mangiaracina, * * * on or about the 15th day of March,
1947, in the Western District of Missouri, and within the jurisdiction
of this Court, did willfully and knowingly attempt to evade and defeat
the said income tax owing by him to the United States of America for the
said calendar year 1946, by failing to make such income tax-return to
the said Collector of Internal Revenue, * * * and by failing to pay to
said Collector of Internal Revenue, * * * said income tax and by
concealing and attempting to conceal from all proper officers of the
United States of America his true and correct gross and net income for
said calendar year of 1946."
Some
of the language followed that of paragraph (b), Section 145, Title 26,
U. S. C. A., and should be deemed sufficient. Paragraph (b) of the
statute forbids that any person shall fail to "pay over any tax
imposed by this chapter."
Moreover,
Rule 7(c) of the Federal Rules of Criminal Procedure specifically
provides that:
"Error
in the citation (of the statute) or its omission shall not be ground for
dismissal of the indictment * * * or for reversal of a conviction if the
error or omission did not mislead the defendant to his prejudice."
Count
I of the indictment appears to have been drawn more particularly under
paragraph (a) of said Section 145, supra, and certainly
defendant's counsel have not been misled, as they have by their motion
called attention to the error in citation, if it be an error.
The
motion to dismiss should be and will be overruled.