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[54-1 USTC ¶9106]Marvin Kobey, Philip Cobert, Harry Kogus and Albert Kogus, Appellants v. United States of America , Appellee

(CA-9), In the United States Court of Appeals for the Ninth Circuit, No. 13,257, 208 F2d 583, November 30, 1953

Appeal from the United States District Court, Southern District of California, Central Division.

Withholding taxes: Penalties: Code provisions made applicable by reference.--The penalties provided in Code Sec. 2707(c) were applicable under an indictment for conspiracy (18 USC) 371) to evade income and other withholding or employment taxes.

Criminal penalties: Failure to file returns, submit information, etc.--As to Counts 11 to 20, laid under Code Sec. 145(b) relating to failure to collect and pay over tax, each appellant was found guilty of failure to supply information under Sec. 145(a).

Criminal penalties: Appeals: Specification of errors: "Package" specification.--The appellants' specification of errors did not conform to Rule 18(2)(d) of this Court, because each "error" intended to be urged was not set out separately and the Court would not consider such "package" specification. Moreover, since refusal of certain requested instructions was assigned as error, the grounds of the objections urged at the trial should have been set forth.

Criminal penalties: No error in refusing bill of particulars.--The appellants assigned as error the denial of the motion for a bill of particulars. It was held that the denial was proper, since the appellants were furnished with photostatic copies of most of the documents which the appellee planned to use at the trial.

Criminal penalties: Trial: Motion for continuance.--The appellants also complained of the denial of their motion for a continuance of the trial to a date not earlier than September 1951. The Court pointed out that the case was recessed to September 4th and the taking of testimony was completed on September 19th.

Criminal penalties: Sufficiency of indictment: Allegation of "duty" or "requirement."--The appellants assigned as error the denial of their motion to dismiss the indictment on the ground that the indictment did not allege any requirement to divulge the amounts paid, to keep accurate records, etc. It was held that under the charge of conspiring to "defraud" or attempting to "defeat or evade" in connection with taxes no averment of "duty" or "requirement" is necessary.

Criminal penalties: Indictment: The "course of conduct" or "single impulse" rule.--The appellants complained that by breaking down the "one course of conduct" into 18 counts, the prosecution exacted penalties far in excess of the maximum. It was held that the "one course of conduct" or "single impulse" rule was not applicable.

Criminal penalties: Appeals: Argument of the U. S. Attorney.--It was held that neither the details of the appellants' illegal gambling operations nor the argument of the U. S. Attorney formed the basis of reversible error.

Criminal penalties: Appeals: Severity of sentence.--It was held that the asserted "severity" of the sentence was not reviewable error.

Cannon & Callister, David H. Cannon, Los Angeles, Calif., Minsky & Garber, Ernest R. Utley, J. B. Beckenstein, Los Angeles, Calif., for appellant. Laughlin E. Waters, United States Attorney, Ray H. Kinnison, Assistant United States Attorney, Chief, Criminal Division, Arline Martin, Assistant United States Attorney, Los Angeles, Calif., for appellee.

Before: MATHEWS and ORR, Circuit Judges, and LEMMON, District Judge.

LEMMON, District Judge:

"Hair-raising" and "horrendous" are the adjectives sued by two of the appellants to denounce the sentences that they are here seeking to overturn.

All four appellants are admitted lawbreakers. Yet now they are loudly invoking a "concept of ethics, social natural justice and fair play"--a concept in which the record shows that they themselves have been conspicuously lacking.

The appellants were bookmakers. Each was convicted on one count of conspiracy to defraud the United States and on eighteen counts of violations of the income and excise tax laws.

All four appellants admit that, in carrying out their illegal practices, they "nicknamed God's creatures", ¹ although, as we shall see, they do not agree upon their reasons for doing so.

Another protective device resorted to by the quartet was to counsel their "agents"--i.e., employees--to destroy records and "have no bookmaking paraphernalia around where it could be found".

All in all, the tale told by this 1536-page record and the bales of exhibits is not a pretty one.

[20 Counts]

1. The Indictment

The indictment, filed on June 12, 1951, named 68 defendants, and consisted of 20 counts. The four appellants were the only defendants named in every count. The appellant Harry Kogus was indicted as Harry Rockwell.

Count One, laid under 18 USCA Sections 88 (1946 Ed.) and 371, charges that all the defendants and "other persons to the grand jury unknown" conspired to defraud the appellee by impairing, defeating, and obstructing the lawful functions of internal revenue officials in "ascertaining, computing, levying, assessing, and collecting taxes" for the appellee. The conspiracy is alleged to have commenced on or about August 1, 1945, and to have continued until the date of the return of the indictment.

The Court recites that the object--not the overt acts--of the conspiracy was to be accomplished as follows:

By concealing the identities of persons dealing with the defendants in connection with horse race betting and other gambling conducted by the defendants and others; concealing the amounts of money paid by such persons to the defendants and vice versa; concealing the identities and the compensation of the defendants' employees in such activities; destroying records that would indicate such data; and by maintaining records of the said activities that were "false, fictitious, and misleading as to the names used for the defendants and the persons dealing with them and the transactions recorded".

Thirteen overt acts are set out in connection with Count One. Since no question has been raised regarding these items, they need not be set out here.

Similarly, since the 44 defendants charged therein were acquitted on Count Two, which alleged a conspiracy to commit offenses against the appellee by attempting to defeat and evade income and excise taxes and by willfully failing to collect and account for income taxes required to be withheld, that Count will not be summarized.

Counts Three to Ten, inclusive, were brought under 26 USCA Section 2707(c). Counts Three to Six, inclusive, allege that the four appellants attempted to defeat and evade income taxes required to be withheld from wages, by willfully failing to "collect and truthfully account for, and pay over" to the appellee such taxes for the four quarters of 1948.

Counts Seven to Ten, inclusive, charge that the appellants attempted to defeat and evade "a large part" of the excise taxes on employers and employees owed to the appellee for the same periods by filing "false and fraudulent" Employers' Tax Returns.

Counts Eleven to Twenty, inclusive, allege violations of 26 USCA Section 145(b). The appellants and another defendant--a different one in each of these last ten counts--are charged with "willfully and knowingly" attempting to "defeat and evade a large part" of the income tax due by each said fifth named defendant for the calendar year 1948.

In each of the 18 substantive counts, the indictment specifies the amount of tax that should have been withheld, paid, or reported due, and the sum actually withheld, reported, or paid by the various named defendants. Since the appellants do not attack the mathematical accuracy of these counts but urge their legal insufficiency, the figures need not be set out here.

[Convicted on Count 1 and Counts 3-20]

2. The Verdicts and the Sentences

Each appellant was found guilty as charged on Count One and on Counts Three to Ten, inclusive, and was found guilty of the lesser offenses of willful failure to supply information for the computation, assessment, and collection of the tax, which lesser offenses are embraced in the offenses charged in Counts Eleven to Twenty, inclusive. The sentence pronounced upon each appellant was as follows:

Imprisonment for five years on Count One and on each of Counts Three to Ten, inclusive, the periods of imprisonment to run concurrently.

Fines of $10,000 on Count One and on each of Counts Three to Ten, inclusive, or a total of $90,000.

Suspension of the imposition of sentence for the lesser offenses included in Counts Eleven to Twenty, inclusive, with five years' probation commencing on the appellant's release from custody following execution of the concurrent sentences under Count One and Counts Three to Ten, inclusive. One of the conditions of probation is that the appellant, during the probationary period, shall pay a fine of $10,000 under each of Counts Eleven to Twenty, inclusive, or a total of $100,000. This latter figure and the $90,000 on Count One and Counts Three to Ten, inclusive, amount to a grand total of $190,000 that must be paid by each appellant.

[Each Error Asserted to Be Set Out Separately]

3. The Specifications of Errors

The Kobey brief contains a specification of eight numbered errors. "Specification No. 6", however, contains four lettered subdivisions, each dealing with the Court's instructions. Of these four subdivisions, two deal with instructions, given or refused, on at least four separate subjects--presumption of innocence, general and specific intent, lack of notification to produce books, and willfulness and good faith. The entire specification of errors covers nine printed pages, and complains of at least fourteen separate and distinct errors.

The Kogus brief has a specification ten pages long, consisting of two numbered errors. Error No. 1, however, is broken into fifteen subdivisions, each dealing with a separate and distinct instruction, given or refused, usually relating to a separate and distinct subject. In many respects, the Kogus specification and the Kobey specification duplicate each other.

Neither specification conforms to Rule 18(2)(d) of this Court, which requires that an appellant's brief shall contain, in the order there stated--

"In all cases, a specification of errors relied upon which shall be numbered and shall set out separately and particularly each error intended to be urged. * * * When the error alleged is to the charge of the court, the specifications shall set out the part referred to totidem verbis, whether it be in instructions given or in instructions refused, together with the grounds of the objections urged at the trial." (Italics supplied)

If the use of lettered subdivisions of numbered specified errors was intended to blur the multiplicity of the objections, it has failed of its purpose. This Court has repeatedly declared itself not bound to consider such "package" specifications. In Mutual Life Ins. Co. v. Wells Fargo Bank & Union Trust Co., 1936, 9 Cir., 86 Fed. (2d) 585, 587, we said of a far less objectionable assignment of error:

"Assignment 6 is that the trial court erred in failing and refusing to give the jury six instructions said to have been requested by appellant. This assignment is invalid, in that it attempts to cover six alleged errors, thereby violating our rule 11, which provides that an assignment of errors 'shall set out separately and particularly each error asserted and intended to be urged.' (Many cases cited)" ²

[No Grounds of Objections Were Set Out]

Furthermore, it should be noted that Specification 6B of the Kobey brief complains that Defendants' Requested Instructions Nos. 33, 37, and 38 were not given, but no "grounds of the objections urged at the trial" are set out in the specification, as required by Rule 18(2)(d), supra. Similarly, Specification No. 1 d, e, f, g, h, i, j, k, l, m of the Kogus brief, relating to Defendants' Requested Instructions Nos. 26, 27, 28, 30, 31, 32, 35, 37, 38, and "-", sets forth in each instance that "objection was seasonably made", citing the transcript of record. Such a reference clearly does not meet the requirement of Rule 18(2)(d), that the grounds of the objections urged at the trial shall be "set out" in the specification.

Finally, the record shows that after the Court had instructed the jury and counsel for the appellants had made certain objections and requests, the attorney for the defense added:

". . . and I assign as error the failure to give the instructions we have requested on the grounds stated."

The cryptic and sweeping phrase, "on the grounds stated", may have referred to some "suggestions" made by counsel for the appellants during a "conference on instructions" or perhaps the "discussion re include (sic) lesser offenses". Both of these running debates commenced on the day preceding the giving of the instructions and continued up to a few minutes before counsel resumed their summations. Immediately afterward, the District Judge delivered his charge.

In our view, such a procedure does not meet the requirement of Rule 30 of the Federal Rules of Criminal Procedure, to the effect that "No party may assign as error any portion of the charge or omission therefrom unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection." ³ Reliance upon "the grounds stated"--if any grounds were stated--the day before is palpably inadequate.

Despite the fact, however, that both the specifications of errors and the objections to the Court's failure to give certain requested instructions were improperly presented, we are considering all the substantial points raised by the appellants.

[The Conspiracy Statute]

4. The Applicable Statutes

Count One is based upon the conspiracy statute, 18 USCA Section 371, which reads as follows:

"If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both.

"If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor."

[Sec. 2707(c)]

Counts Three to Ten, inclusive, have as their applicable statute 26 USCA Section 2707(c), the text of which follows:

"(c) Any person required under this subchapter to collect, account for and pay over any tax imposed by this subchapter, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this subchapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution."

The "subchapter" referred to in the above subsection (c) is "Subchapter A--Pistols and Revolvers", which is part of Chapter 25 of Title 26 of the United States Code--a chapter that deals with "Firearms". Since the present indictment, despite its allegedly "hair-raising" and "horrendous" results, does not deal with weapons of war, we must look elsewhere for its ultimate penal source.

It will be recalled that Counts Three to Six, inclusive, allege that the appellants attempted to defeat and evade income taxes required to be withheld from wages. This necessitates recourse to Subchapter D of Chapter 9 of 26 USCA--a subchapter dealing with "Collection of Income Tax at Source on Wages". Chapter 9 embraces the subject of "Employment Taxes". Section 1627, in Subchapter D, reads as follows:

"Section 1627. Other laws applicable

"All provisions of law, including penalties, applicable with respect to the tax imposed by Section 1400 shall, insofar as applicable and not inconsistent with the provisions of this subchapter, be applicable with respect to the tax under this subchapter."

We must refer therefore to Section 1400, which is part of Subchapter A, "Employment by Other Than Carriers". That subchapter, which relates to the Social Security tax, is cited as the "Federal Insurance Contributions Act". Like Subchapter D, supra, it is part of Chapter 9, supra. But since Section 1400 merely gives the "Rate of Tax" on employees that come under Subchapter A, we must look to some other section in the same subchapter for the final link in the statutory chain that is to bind the appellants to Section 2707(c), cited in Counts Three to Ten, inclusive, of the present indictment.

[Sec. 1430--The Vital Link]

That vital link is Section 1430, which is as follows:

"Other laws applicable

"All provisions of law, including penalties, applicable with respect to any tax imposed by section 2700 or section 1800, and the provisions of section 3661, shall, insofar as applicable and not inconsistent with the provisions of this subchapter, be applicable with respect to the taxes imposed by this subchapter."

Section 2700, supra, is part of Subchapter A of Chapter 25, "Firearms", of which the crucial Section 2707(c) is also a part. Section 2700 itself deals only with "Rate", "Exemptions", and "Computation in special cases".

Counts Seven to Ten, inclusive, charge the appellants with attempting to defeat and evade "a large part" of the excise taxes for 1948. Here again 26 USCA Section 2707(c) is given as the violated statute, and here again we must have recourse to Section 1430, supra, which, so far as employees are concerned, links the Social Security tax to the penal provisions of the "Pistols and Revolvers" subchapter.

Subchapter C, "Tax on Employers of Eight or More", is applicable to these four counts, insofar as they relate to "the excise taxes on employers". Like Subchapter A, Subchapter C contains a section linking it with Section 2707(c), through Section 2700, as explained above:

"Section 1610. Other laws applicable

"All provisions of law (including penalties) applicable in respect of the taxes imposed by section 2700, shall, insofar as not inconsistent with this subchapter, be applicable in respect of the tax imposed by this subchapter."

[Sec. 145(a) and (b)]

We come finally to the last ten counts of the indictment, Counts Eleven to Twenty, inclusive. Each of these counts cites 26 USCA Section 145(b), the text of which follows:

"Failure to collect and pay over tax, or attempt to defeat or evade tax. Any person required under this chapter to collect, account for, and pay over any tax imposed by this chapter, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution."

It will be recalled that, as to these Counts Eleven to Twenty, inclusive, each appellant was found guilty of the lesser offenses of willful failure to supply information, etc. The "lesser offenses" referred to are defined in 26 USCA Section 145(a), which reads as follows:

"(a) Failure to file returns, submit information, or pay tax. Any person required under this chapter to pay any estimated tax or tax, or required by law or regulations made under authority thereof to make a return or declaration, keep any records, or supply any information, for the purposes of the computation, assessment, or collection of any estimated tax or tax imposed by this chapter, who willfully fails to pay such estimated tax or tax, make such return or declaration, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than one year, or both, together with the costs of prosecution."

[Appellants' Bookmaking Activities]

5. The Admitted Facts

The record is long, and the machinations of the appellants were intricate and devious. It would unduly burden an already overlong opinion to give all the details of the concealments and evasions revealed by the voluminous transcript. From the admissions contained in their own briefs, however, we can gather what manner of men these appellants are.

There is very little conflict in the evidence. The four appellants were engaged in illegal bookmaking activities in Los Angeles County , California , as co-partners. Even the firm name is shrouded in murk. In the record, the partnership is shown to have been variously called "Colby Collection Agency", "Colby Collection Service", "Cobert Collection Agency", and "Cobert Collection Service".

This bookmaking establishment was maintained on premises also occupied by the Guarantee Finance Company, which was owned by the four appellants. The bookmaking activities were maintained as a clearinghouse for the use of other bookmakers, who conducted their own betting operations in the same county, and had their own individual gambling customers.

These "other bookmakers" are the occasion for some more of that "double talk" with which this record is replete. "These independent bookmakers," Kobey and Cobert, two of the appellants, say in their opening brief, "are referred to in the record occasionally as 'agents', but they were in no sense agents of the appellants, as the use of the word might imply."

The other two appellants, Harry and Albert Kogus, however, who are brothers, freely refer to these "individual bookmakers" as their "agents", adding that "the terms 'agent' and 'bookmaker' (are) used interchangeably throughout the transcript and throughout this brief." It is the view of this Court that these so-called "independent" bookmakers were, in fact and in law, the actual agents and employees of the appellants, and the jury, by its verdict, must have so found.

[Records Destroyed on Advice of Appellants]

It is admitted that some of the betting "markers" and "weekly top sheets" were in fact destroyed by the "bookmakers" on the advice of the appellants. The appellant Harry Kogus, for example, testified that he told the "agents":

"If I were them I would have no bookmaking paraphernalia around where it could be found.

* * *

". . . we told them . . . if I were they, I would have nothing around that would incriminate them."

The appellants have attempted to explain this destruction of records by asserting that it was "to avoid detection by state, county, and city authorities but in no circumstance for the purpose of evading taxes due the Federal Government."

The jury apparently disbelieved--as it was entitled to disbelieve--this pious disclaimer of any intention to deceive the United States .

On January 27, 1949, B. E. Burchfiel, chief investigator for the Division of Corporations of the State of California , seized certain books and records at 1749 East Florence Avenue , the partnership's headquarters. The appellants assert that all the information in the destroyed betting markers had been transferred into the seized records "and were available to the Federal authorities".

Be that as it may, the fact remains that the appellants' criminal intent in counseling the destruction of the "markers" and "weekly top sheets" might well have been inferred by the jury from the entire record.

[First Names, Nicknames, or Symbols Used]

Finally, the appellants admit that "the procedure employed was to designate the bookmakers and their betting customers and their wages on various sheets upon which the bettors and the bookmakers with whom the bettors made their wagers were identified by first names, nicknames, or by symbols."

Here again counsel for the two pairs of appellants disagree in their explanations. The Kogus brief asserts that "This use of code names was to protect the individual bookmakers who did not want anyone to know their clients, for that was their stock in trade".

Through counsel for the Kogus brothers were referring to the use of code names "for the various bookmakers or agents", they may have had in mind the reason for the use of such noms de books to designate the customers of the bookmakers. Harry Kogus testified that no "agent" wanted "anybody to know who his customers were".

The Kobey-Cobert attorneys, on the other hand, explain that the subterfuge was resorted to so as--

"To make it difficult for the enforcement agencies of the State of California to discover the identities and names of the independent bookmakers and of their betting customers."

In his testimony, Harry Kogus gave three explanations. We have already quoted one of them. In addition, he offered two others--each one different from that offered by his own counsel:

". . . if these markers or statements were ever confiscated by the local authorities, why, the agent didn't want his full name on there or true name on those markers."

So far, Harry Kogus agreed with the theory advanced by counsel for Kobey and Cobert. But he also had a third theory of his own:

"It helped the clerks a lot because in so many cases they were long names, and names that were hard to understand over the telephone, and we tried to keep these down to as many three-letter names as possible, or four, and used numbers as much as possible. Well, we kept it down in most cases below six letters so it wouldn't be too hard for the clerk."

In any event, these varied explanations are quite confusing. These appellants have woven a tangled web indeed!

[Bill of Particulars Denied]

6. The Denial Of The Motion For A Bill Of Particulars Was Proper.

In connection with the first Kobey-Cobert specification of error, we find that on June 29, 1951, the appellants filed a motion for a bill of particulars with regard to Count One. They complained that nowhere could "it be determined from the indictment the persons whose names or identities are referred to, nor the amounts paid, nor the persons to whom any money was paid by the defendants, nor what memoranda, accounts, records and books were destroyed, nor the nature of such memoranda, etc., or what memoranda and records were false, fictitious and misleading, or in what particulars the prosecution contends they were false," etc.

In the first place, the argument made below in support of this motion--"That the books and records had been taken from the possession of the appellants by the California state authorities"--was not a cogent one. The record shows that the appellants were furnished with photostatic copies of most of the documents that the appellee planned to use at the trial, and that, furthermore, the District Judge's law clerk was deputized as a duputy county clerk so that other documents would be available to the appellants. These latter documents were those that had been seized by Mr. Burchfiel, supra.

Secondly, it is well settled that a motion for a bill of particulars is addressed to the sound discretion of the District Court. ⁴ The record shows that this discretion was not abused. As we have just seen, the District Judge was careful to guard the rights of the appellants.

As part of this same specification of error, Kobey and Cobert Complain that denial of their motion for a continuance of the trial to a date not earlier than in September, 1951, forced them to go to trial on August 6, 1951. They assert that because of "the shortness of the time between the return of the indictment (June 12, 1951), and the trial date (August 6, 1951) appellants had no reasonable opportunity to have these books and records audited and analyzed by appellants' new auditor Manning," etc. As we shall see hereafter, however, the case was recessed to September 4, 1951, and the taking of testimony was completed on September 19, 1951.

It should be borne in mind, moreover, that the case was tried in the afternoons, so that counsel would have time to prepare their work in the mornings. This gave them additional time to study the records with their auditor.

This first specification is without merit.

[Assistance of Counsel of Their Choosing Not Denied]

7. The Appellants Were Not Denied The Assistance of Counsel Of Their Own Choosing.

Specification of Error No. 2, urged by the appellants Kobey and Cobert, complains that the "denial of (their) motion for the continuance of the trial after (their) chief counsel, Mr. (David H.) Cannon, had been stricken seriously ill, and unable to proceed, compelled the appellants to proceed with the trial and thus be deprived of the effective aid . . . of counsel of their own choosing, in violation of the Fifth and Sixth Amendments to the United States Constitution".

This serious charge requires a careful scrutiny of the record, with particular regard to the chronology of events.

Mr. Cannon and William B. Beirne were the attorneys for the four appellants from the dawn of the present record to a time beyond the critical events that are about to be narrated. Both these gentlemen have denied that Mr. Beirne represented all the appellants. Mr. Beirne himself told the lower court that he represented "solely . . . one of the Koguses", but "By a mistake . . . (he) was listed as attorney for all of the defendants."

In their closing brief, Mr. Cannon and his present associate go even farther. They deny that Mr. Bierne was appellants' counsel at all! They later qualify this denial by saying that he "was not appellants' counsel of their own choice".

All these denials, whether qualified or unqualified, are flatly contrary to the record. For example, on June 29, 1951, there was filed a group of motions, including the one for a bill of particulars, supra, which was signed by both Mr. Cannon and Mr. Beirne, as attorneys for the four appellants. On July 25, 1951, they both signed an affidavit describing themselves the same way. The same is true of a motion "for further continuance" filed on behalf of the appellants, and making the affidavit of July 25, 1951, supra, a part thereof. In addition, in the various orders and in the minutes, we find constant references to both gentlemen as being attorneys for all the appellants.

[Mr. Cannon Not Chief Counsel]

We now proceed to the crucial chronology.

The 68 defendants were tried in groups. The trial of the four appellants and seven other defendants commenced on August 6, 1951. During the first few days thereafter, Mr. Beirne took an active part in the conduct of the defense, equally with Mr. Cannon. Up to that time, there was no suggestion that Mr. Cannon was "chief counsel" or that "Mr. Beirne's association with Mr. Cannon was primarily for the purpose of assisting Mr. Cannon on certain phases of the case." To all intents and purposes, Mr. Beirne's authority as counsel was co-ordinate with that of Mr. Cannon, who, at that time at least, gave no indication that he had "supervision of the trial".

On the afternoon of Friday, August 10, 1951, Mr. Cannon suddenly addressed the Court thus:

"Mr. Cannon. If the court please, may I be excused? I have been here this morning, but I cannot stay longer. Mr. Beirne will carry on in my absence, but I simply can't stay here. It would be against the advice of my doctor."

The Court of course excused Mr. Cannon. Mr. Beirne stated that he was not prepared to examine witnesses "here on out", but that if he had to, he would. (Mr. Beirne had been doing very nicely up to that point.) He suggested a recess until the following Monday. The trial was resumed for the rest of that Friday afternoon, but the case was recessed progressively to August 21, 1951, August 27, 1951, and finally to September 4, 1951, when Mr. Beirne asked for a still further continuance, "for the last time", until Monday, September 10, 1951. Mr. Beirne promised that on the latter date Mr. Cannon, then "home from the hospital", would be available. As a matter of fact, according to the Kobey brief itself, "Mr. Cannon was not able to return again to the trial of the case, and was physically unable to take further part in the proceedings." In other words, Mr. Beirne, though a good lawyer, was a poor prognasticator!

In support of his plea for a further continuance, Mr. Beirne modestly stated that he "would feel safer . . . if Mr. Cannon were present to represent these defendants", and, in a surge of self-immolation, added:

"I haven't the slightest conception of the difference between a debit and a credit and I think it will be proved here in my cross-examination of the witnesses. No accountant and no certified public accountant, no auditor, has been able to hammer that into my head during this period."

Neither the Court nor the prosecution shared Mr. Beirne's low estimate of his own capabilities. When Mr. Cannon first became sick, the Court had told Mr. Beirne, "I am sure you will do well." Counsel for the appellee stated:

"Of course, I think Mr. Beirne is the type of counsel, and we all know his reputation, that there aren't any better prepared attorneys in Los Angeles or more able."

At any rate, counsel for the appellee and for some of the appellants' co-defendants opposed a continuance.

The Court ruled:

"You are equally divided--the defendants' attorneys are equally divided on the subject and the motion for further continuance will be denied."

In the light of the entire record, it is this Court's opinion that the judge below did not abuse his discretion in refusing to grant the appellants any further continuances. Mr. Beirne, an attorney of their own choice, conducted the remainder of the case in a workmanlike manner.

[No Duty to Divulge Need Be Alleged]

8. The Indictment Did Not Need To Allege That The Appellants Were Required To Divulge The Amounts Paid, To Keep Accurate Records, Etc.

Specification of Error No. 3, filed by the appellants Kobey and Cobert, asserts that "The Court erred in denying appellants' motions to dismiss the indictment and to acquit the appellants, made by them before trial on the ground that the indictment did not state an offense."

In their briefs, these two appellants launch a manifold attack upon the indictment. Each objection will hereinafter be considered separately.

The gravamen of the first criticism of the indictment is that "Nowhere is there any allegation of any requirement to divulge, and if so to whom, the amounts of money transferred or paid, nor is there any allegation as for (sic) what purpose such information should be divulged", etc. This emphasis upon the indictment's failure to allege certain legal requirements imposed upon the appellants, is expressed in several pages of the brief.

It will be recalled that every one of the nineteen counts of the indictment on which conviction was had, charges the appellants either with conspiring to "defraud" or with attempting to "defeat and evade" in connection with taxes. Under such allegations, no averment of "duty" or "requirement" is necessary.

In United States v. Troy, 1934, 293 U. S. 53 [58], 61-62 [35-1 USTC ¶9002], the Court emphasized that under a "defeating" allegation, no averment of "duty" is required:

"If the charge against appellee had been failure to make return, or pay over the tax for the corporation it might have been necessary to allege and show some duty in respect thereto; but when charged with wilful effort to defeat the tax by presenting a false return no allegation of duty to make the return was necessary. The alleged act sufficiently indicated appellee's criminal intent."

[The "Course of Conduct" Rule]

9. The Eighteen Substantive Counts Are Not Vulnerable To Attack Under The "Course Of Conduct" Or "Single Impulse" Attack.

Still under their Specification No. 3, Kobey and Cobert complain that "by breaking down this one 'course of conduct' or at most two 'course of conduct' into eighteen counts, the prosecution has exacted penalties far in excess of the maximum," etc.

[The Universal Case Distinguished]

In support of their theory, the appellants quote from United States v. Universal C. I. T. Credit Corporation, 1952, 344 U. S. 218, 224:

"The offense made punishable under the Fair Labor Standards Act is a course of conduct. Such a reading of the statute compendiously treats as one offense all violations that arise from that singleness of thought, purpose or action, which may be deemed a single 'impulse', a conception recognized by this Court in the Blockburger case (Blockburger v. United States, 1932, 284 U. S. 299), supra, at 302, quoting Wharton's Criminal Law (11th ed.) Section 34."

The Universal case, however, can be distinguished from the one at bar, both on the facts and on the law. In that case, thirty-two counts were laid: six for failure under Section 6 of the Act to pay minimum wages, twenty for violation of the overtime provisions of Section 7, and six for failure to comply with the requirements for record-keeping under Section 11.

The Supreme Court was careful to point out that it was deciding the Universal C. I. T. case in accordance with the mandate of the particular statute then before it, and was not attempting to lay down a general rule:

"Instead of balancing the various generalized axioms of experience in construing legislation, regard for the specific history of the legislative process that culminated in the Act now before us affords more solid ground for giving it appropriate meaning." (Page 222)

Emphasizing the closeness of the case and the narrowness of the problem there presented, the Court continued:

"It would be self-deceptive to claim that only one answer is possible to our problem. But the history of this legislation and the explicitness of its language weigh against the Government's construction of a statute that cannot be said to be decisively clear on its face one way or the other. Because of the history and language of this legislation, the case is not attracted by the respective authority of two cases pressed upon us. In re Snow, 120 U. S. 274, and Blockburger v. United States , 284 U. S. 299." (Italics supplied) (Page 224)

[The "Single Impulse" Rule]

In the Blockburger case, supra, cited in United States v. Universal C. I. T. Credit Corporation, supra, the Supreme Court quoted with approval the following sentence from Wharton, supra:

"If successive impulses are separately given, even though all united in swelling a common stream of action, separate indictments will lie." (Page 302)

In Norwitt v. United States , 9 Cir., 1952, 195 Fed. (2d) 127 [52-1 USTC ¶9252], 133-134, certiorari denied, 1952, 344 U. S. 817, this Court disposed of what amounted to this same "course of conduct" argument. ⁵

Plainly related to this "single impulse" argument of the Kobey-Cobert brief is the Kogus contention that "The conspiracy count was merged in the substantive counts and, therefore, appellants were convicted of the same crime when found guilty of the conspiracy count and the substantive counts".

The short answer to this objection is found in United States v. Bayer, 1947, 331 U. S. 532, 542:

"The indictment is for conspiring and we have but recently reviewed the nature of that offense. Pinkerton v. United States , 328 U. S. 640. Its essence is in the agreement or confederation to commit a crime, and that is what is punishable as a conspiracy, if any overt act is taken in pursuit of it. The agreement is punishable whether or not the contemplated crime is consummated. But the same overt acts charged in a conspiracy count may also be charged and proved as substantive offenses for the agreement to do the act is distinct from the act itself." (Italics supplied)

[Verdict Supported by Substantial Evidence]

10. There Was Substantial Evidence To Support The Verdict And Judgment.

Kobey-Cobert Specification No. 4 complains that "There was no substantial evidence to sustain the charges in the indictment," etc.

In our discussion of "The Admitted Facts", supra, we have adverted to several subterfuges practiced by the appellants, such as the destruction of records and the use of nicknames. It would unduly lengthen this opinion to unfold the "intricacies" of the appellants' admitted "complicated" and "complex" "double entry bookkeeping". Suffice it to say that, after considering the entire evidence, the jury may well have come to the conclusion that the appellants' accounting system was not merely that of "double entry", but also that of "double pay rolls", "double dealing", "double talk"--and "double cross"!

Similarly, the jury was entitled to infer from all the facts that the appellants did not construct watertight bulkhead compartments in dealing with the state and the federal tax authorities--cramming one compartment with nicknames and torn betting markers, and packing the other compartment with pure virgin snow!

[Expansive Ambit of the Social Security Act]

As part of their argument in support of Specification No. 4, the appellants Kobey and Cobert assert that "Illegal businesses are not within the purview of the Social Security Act".

So far as the conspiracy count is concerned, the appellants concede that "This is a question of first impression as far as we know". And the burden is upon them to show that the Court below erred either as to the law or as to the facts.

In Rutkin v. United States, 1952, 343 U. S. 130, 137 [52-1 USTC ¶9260], footnote 8, which seems to have escaped the attention of counsel, Mr. Justice Burton has collected an impressive list of decisions to support his statement that "There has been a widespread and settled admin istrative and judicial recognition of the taxability of unlawful gains of many kinds under Section 22(a) (of the Internal Revenue Code, defining 'gross income')." Among the types of income held to be taxable has been that derived from "race track bookmaking". ⁶

Furthermore, the Supreme Court has held that the ambit of the Social Security Act is expansive rather than limited. In United States v. Silk, 1947, 331 U. S. 704, 711-712, the Court used the following language:

"Since Congress has made clear by its many exemptions, such as, for example, the broad categories of agricultural labor and domestic service, 53 Stat. 1384, 1393, that it was not its purpose to make the Act cover the whole field of service to every business enterprise, the sections in question are to be read with the exemptions in mind. The very specificity of the exemptions, however, and the generality of the employment definitions indicates that the terms 'employment' and 'employee' are to be construed to accomplish the purposes of the legislation. As the federal social security legislation is an attack on recognized evils in our national economy, a constricted interpretation of the phrasing by the courts would not comport with its purpose. Such an interpretation would only make for a continuance, to a considerable degree, of the difficulties for which the remedy was devised and would invite adroit schemes by some employers and employees to avoid the immediate burdens at the expense of the benefits sought by the legislation. These considerations have heretofore guided our construction of the Act. (Cases cited.)" (Italics supplied)

[Employees of Illegitimate Business Included]

The appellants Kobey and Cobert assert that under Section 1426 of the Internal Revenue Code, which is part of Chapter 9, Subchapter A, supra, "an employee is one who is engaged in a legitimate business". This is an incorrect paraphrase of Section 1426(d), the full text of which follows:

"(d) Employee. The term 'employee' includes an officer of a corporation, but such term does not include (1) any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an independent contractor or (2) any individual (except an officer of a corporation) who is not an employee under such common-law rules."

There is no suggestion here that the employment must be lawful. As we have seen, to be taxable, wages need not be derived from legitimate employment.

It is asserted also that under California law, contracts of bookmakers with their employees are "illegal, void and unenforceable". It is unquestionable that the validity of California contracts should be tested under California law; but the Federal taxability of the proceeds from such contracts is a matter of Federal law.

It is the holding of this Court that illegal businesses come within the ambit of the Social Security Act.

[Double Pay Rolls]

Finally, we come to the problem of the appellants' double pay rolls, which Kobey and Cobert describe as relating to "the basic tenet of the prosecution".

Cameron L. Handley, a certified public accountant employed by the four appellants, identified their two pay rolls, hereinafter referred to as Exhibits 31 and 33. Exhibit 31 was described as "a record of the pay roll of the Colby Collection Agency for the period" probably commencing on August 30, 1948, and extending to January 22, probably of the year 1949. With certain exceptions it was entirely in Handley's own handwriting. It is agreed that Exhibit 31 was used as the basis for making the income tax returns and social security deductions.

Exhibit 33 was a "subsidiary pay roll, which was not to be paid in currency". On that pay roll, no social security deductions or withholding deductions were made by Handley on the basis of the figures indicated after the names of the employees. The appellee points out that the failure to file quarterly returns showing "withholding", old age benefits and unemployment insurance, required in Exhibit 33, caused the discrepancies charged in Counts Three to Ten, inclusive, and that the failure to report the additional salaries reflected in Exhibit 33 forms the basis of Counts Eleven to Twenty, inclusive.

A careful study of the record convinces us that in this respect, too, there was substantial evidence to support the jury's verdict.

[Asserted Omissions in the Charge Not Objected To]

11. This Court Need Not Consider Asserted Ommissions In The Charge That Were Not Made The Subjects Either Of Requests Or Of Objections.

Specification No. 5 of the Kobey-Cobert brief complains that the Court "erred in failing to charge the jury on all of the elements of the offenses charged in the indictment, such as what constituted an employer-employee relationship; . . . what constituted wages . . ., net income and gross income"; and what constitutes the essential elements of conspiracy.

These appellants admit, however, that "Such omissions in the instructions were not specifically excepted (sic) to by the appellants," but they assert that such omissions "constitute such serious and plain error that the appellate court should take notice thereof even in the absence of specific exceptions (sic)". (The term used in Rule 30 is "objection".)

Furthermore, a glance at the appellants' requested instructions reveals that not only was the ommission of the instructions now being considered, not the subject of any objections on the part of the appellants, but that except as to conspiracy, they did not request such instructions in the first place.

As to conspiracy, it is true that the four appellants requested instructions dealing with what they regarded as "all of the essential elements" of that crime "as charged in the first count of the indictment as applicable to the alleged violations under the Internal Revenue Code". But even as to these instructions, as the Kobey brief admits, there were no objections to the Court's failure to give them. In any event, the trial judge adequately instructed the jury on the law of conspiracy.

It will be noted that the other alleged omissions now complained of were not of instructions of a "stock" nature, but referred to subjects specially related to the facts at bar. In such a situation, adherence to Rule 30 is particularly necessary.

In this connection, we may take a passing glance at part of Specification 6A of the Kobey-Cobert brief and at Specification 1(o) of the Kogus brief. Kogus concedes that the instruction complained of was not "seasonably objected to, as required by Rule 30 . . .", but contends that "An appellate court may notice error even though not seasonably objected to," etc.

The instruction complained of was as follows:

"It is not necessary for the prosecution to prove knowledge of the accused that a particular act or failure to act is a violation of law. Nor is ignorance of the law available as a defense to a person who has committed a crime. Everyone is presumed to have knowledge of what the law forbids and what the law commands. However, evidence that the accused acted or failed to act because of ignorance of the law, is to be considered in determining whether or not the accused acted or failed to act with specific intent as charged."

The error complained of was the giving of "an instruction that ignorance of the law is no excuse when the gist of the crime involved is 'knowledge'." This type of instruction, likewise, closely related as it is to the facts of the case, comes peculiarly within the sweep of Rule 30.

Nevertheless we may observe that, read as a whole--as it must be read--the instruction is substantially correct. Despite its inartificial phrasing, the giving of it does not constitute reversible error.

[Motive Only Material for Determining Intent]

Finally, all four appellants object to the following instruction given by the Court below:

"Good motive is never a defense where the act done is a crime. If a person does intentionally an act which the law denounces as a crime, motive is immaterial except insofar as it may aid determination of the issue as to intent."

After the charge to the jury had been given, Mr. Beirne engaged in a considerable colloquy with the Court on the subject of the above instruction. Counsel's final words on the subject were as follows:

"I am not criticizing your Honor's instruction. I am objecting from the general standpoint of the difference between motive and intent."

This clearly was not a compliance with Rule 30. It was not a "distinct" statement of the "matter" to which counsel was objecting. Indeed, it wound up with a "distinct" disavowal of criticism of the instruction.

Furthermore, the specification in neither brief conforms to the requirement of Rule 18(2)(d) of this Court, supra; namely, it does not state particularly "the grounds of the objections urged at the trial".

The Kobey-Cobert brief quotes two paragraphs of the colloquy between Court and counsel, but significantly omits the upshot of it all; namely, that counsel was not really criticizing the instruction. The Kogus brief does even less: it quotes no part of the colloquy at all, but merely says that "The ground for objection stated at the time of trial was that appellants' entire defense is good faith, and that this instruction vitiates that defense". Here again, the "lame and impotent conclusion" of the dialogue is sedulously omitted.

In addition to all this, this Court does not believe that the instruction as given was erroneous. The role that motive plays as an element of crime, as stated by the Court below, conforms to hornbook law, as thus expressed in 22 C. J. S. Criminal Law, Section 31a, Page 88, 89:

"Motive is not an essential element of a crime. The most laudable motive is no defense where the act committed is a crime in contemplation of law, . . . Proof as to motive may be of assistance in throwing light on the intent with which the act was committed, . . ."

The Court's charge was full and comprehensive, consisting of 94 separate instructions and covering 54 pages of the printed transcript. Read as a whole, the charge of the learned Judge below fairly and adequately instructed the jury on the applicable law.

[Details of Gambling Operation No Reversible Error]

12. Neither The Details Of The Appellants' Illegal Gambling Operations Nor The Argument Of The United States Attorney Formed The Basis Of Reversible Error.

In their Specification No. 7, Kobey and Cobert complain that they "did not have a fair trial within the concept of the Fifth and Sixth Amendments to United States Constitution in that the illegal gambling operations were accentuated (a) by unnecessary details of the gambling operations, same being irrelevant to the charges made in the indictment; and (b) by the improper argument of the United States Attorney, in which he injected false issues and misrepresented the evidence".

In their discussion of this specification, these two appellants also intimate that they were denied due process because their sentences were too severe. Since this latter complaint is made a part of the basis of Specification No. 8, infra, we will defer consideration of it.

We need not spend much time on this seventh specification. The "details of the gambling operations" of the appellants were necessary to acquaint the jury with the full scope and magnitude of the illicit enterprise.

As for the argument of the United States Attorney, we have read every word of it that is reproduced in the record. The appellants have "underscored" three pages of it, but have failed to point out in what respect those three pages, or any other pages, constituted "improper argument" or "injected false issues" or "misrepresented the evidence".

There is absolutely no merit to this Specification.

["Severity" Not Reviewable]

13. The Asserted "Severity" Of The Sentence Is Not Reviewable Here.

Specification No. 8 in the Kobey-Cobert brief complains that the sentence imposed upon the appellants was "unusual and cruel in violation of Amendment Three (sic) to the United States Constitution." The appellants no doubt had in mind Amendment Eight.

This Constitutional attack upon the sentence is twofold:

First, "the eighteen substantive counts all collectively charged but one single offense, which should not have been split up in 18 separate offenses so as to permit of the imposition of an 18 times multiplied punishment".

This point has already been discussed in Section 9 of this opinion, dealing with the "course of conduct" or "single impulse" principle.

Second. Kobey and Cobert attack the "severity" of the sentence as constituting a denial of due process of law. In support of this contention, these appellants twice cite Townsend v. Burke, 1948, 334 U. S. 736, as holding "that the defendant was denied due process on the ground that his sentence was too severe".

This is an astounding misrepresentation of the Supreme Court's holding in that case, as may be seen from the following language on page 741 of the opinion--a passage much stronger than that pointed out by the appellee:

"We would make clear that we are NOT reaching this result because of petitioner's allegation that his sentence was unduly severe. The sentence being within the limits set by the statute, its severity would not be grounds for relief here even on direct review of the conviction, much less on review of the state court's denial of habeas corpus. It is not the duration or severity of this sentence that renders it constitutionally invalid; it is the careless or designed pronouncement of sentence on a foundation so extensively and materially false, which the prisoner had no opportunity to correct by the services which counsel would provide, that renders the proceedings lacking in due process." (Italics supplied)

14. Conclusion

Despite the multipronged assault made upon them by two batteries of astute and resourceful counsel, these convictions must stand. The lengthy record unfolds a sordid tale of tax evasion, concealment, and manipulation.

The trial court was careful to safeguard the appellants' substantial rights. The evidence of guilt was strong. The judgments are affirmed.

¹ Hamlet III i 151-152.

² See also Gila Valley Irr. Dist. v. United States , 9 Cir., 1941, 118 Fed. (2d) 507, 510 (six errors enumerated in one specification).

³ See also Palmer v. Hoffman, 1943, 318 U. S. 109, 119; Goldstein v. United States, 9 Cir., 1934, 73 Fed. (2d) 804, 806; Brown v. United States , 9 Cir., 1953, 201 Fed. (2d) 767, 770; United States v. Furlong, 7 Cir., 1952, 194 Fed. (2d) 1, 3, certiorari denied, 1952, 343 U. S. 950; Enriquez v. United States, 9 Cir., 1951, 188 Fed. (2d) 313, 316.

⁴ Nye & Nissen v. United States , 9 Cir., 1948, 168 Fed. (2d) 846, 851, affirmed, 1949, 336 U. S. 613; Stillman v. United States, 9 Cir., 1949, 177 Fed. (2d) 607, 615.

⁵ See Judge Sawtelle's exhaustive discussion of the somewhat cognate contract between "transaction" and "cause of action" in equity, in United States v. Pan-American Petroleum Co., 9 Cir., 1932, 55 Fed. (2d) 753, 776-778, certiorari denied, 1932, 287 U. S. 612.

⁶ See also Goldbaum v. United States, 9 Cir., 1953, 204 Fed. (2d) 74, 77 [53-1 USTC ¶9342].

 

 

[55-1 USTC ¶9414]Austin F. McFee, Appellant v. United States of America , Appellee

(CA-9), In the United States Court of Appeals for the Ninth Circuit, No. 13,482, 221 F2d 807, April 29, 1955

Appeal from the United States District Court for the District of Idaho, Northern Division.

[1939 Code Sec. 145(b)--similar to 1954 Code Sec. 7201]

Tax evasion: Criminal prosecution: Net worth method of proof: Reconsideration in light of Supreme Court cases: Reaffirmance.--The conviction for criminal evasion of income taxes having been remanded for reconsideration in the light of Supreme Court decisions on the issue of reconstruction of income under the net worth increase method, the District Court's judgment was again affirmed.

Harold S. Purdy, Coeur d'Alene, Ida., J. F. Emigh, Butte, Mont., Elden McFarland, Washington, D. C., James P. Keane, Wallace, Ida., for appellant. H. Brian Holland, Assistant Attorney General, Ellis N. Slack, John H. Mitchell, Joseph M. Howard, Joseph F. Goetten, Special Assistants to Attorney General, Washington, D. C., Sherman F. Furey, United States Attorney, Boise, Ida., for appellee.

Before MATHEWS, HEALY and ORR, Circuit Judges.

PER CURIAM:

As required by the Supreme Court's order of January 10, 1955, 348 U. S. 905 [55-1 USTC ¶9139], we have considered this case in the light of Holland v. United States, 348 U. S. 121 [54-2 USTC ¶9714]; Friedberg v. United States, 348 U. S. 142 [54-2 USTC ¶9713]; Smith v. United States, 348 U. S. 147 [54-2 USTC ¶9715]; and United States v. Calderon, 348 U. S. 160 [54-2 USTC ¶9712], and have concluded that our decision of August 24, 1953, 206 Fed. (2d) 872 [53-2 USTC ¶9549], was correct. The District Court's judgment is, therefore, again affirmed.

 

 

[55-1 USTC ¶9139]David H. Mitchell v. United States of America Hy Goldbaum et al. v. United States of America Thomas W. Banks v. United States of America Austin F. McFee v. United States of America C. Maxwell Brown v. United States of America Rob ert M. Watts v. United States of America Keith M. Beaty v. United States of America Jacob Strauch et al. v. United States of America Lester H. Burdick v. United States of America

In the Supreme Court of the United States, Nos. 622 (Oct., 1953 Term), 12, 13, 15, 133, 135, 209, 215, 249, 348 US 905, 75 SCt 311, 349 US 905, 75 SCt 581

On Writ of Certiorari to the United States Court of Appeals for the Ninth (Goldbaum, McFee), Eighth (Banks, Mitchell), Sixth (Strauch, Brown), Tenth (Watts), Fourth (Beaty), and Third (Burdick) Circuits.

[1939 Code Secs. 145 and 3614--similar to 1954 Code Secs. 7201-7203 and 7602]

Tax evasion: Proof of unreported income through evidence of increase in net worth: Various defenses.--Convictions for criminal evasion of income taxes were vacated and the cases were remanded for reconsideration in the light of Supreme Court decisions upholding proof of tax evasion through reconstruction of income under the net worth increase method. The merits of various defenses raised in the lower court proceedings were not passed upon by the Supreme Court.

Irvin Goldstein, Joseph B. Keenan, Alvin O. West, John W. Graff, Elden McFarland, Lee S. Jones, Helen R. Graft, Peyton Ford, Sumner M. Redstone, H. D. Reed, Frank A. Bruno, Llewellyn A. Luce, W. M. Nicholson, John J. Hooker, Rob ert M. Taylor, John C. Noonan, Temple W. Seay for petitioners. Rob ert L. Stern, then Acting Solicitor General, Assistant Attorney General Holland, Ellis N. Slack, Meyer Rothwacks, Joseph M. Howard, Murray L. Schwartz, David L. Luce, Solicitor General Sobeloff for the United States.

PER CURIAM:

In Nos. 12, 13, 15, 133, 135, 209, 215, and 249 the petitions for certiorari are severally granted. In No. 622, October Term, 1953 the petition for rehearing is granted, the order denying certiorari is vacated, and the petition for writ of certiorari is granted. The judgments are vacated and the cases are remanded to their respective Courts of Appeals for consideration in the light of Holland v. United States[54-2 USTC ¶9714], Friedberg v. United States[54-2 USTC ¶9713], Smith v. United States[54-2 USTC ¶9715], and United States v. Calderon [54-2 USTC ¶9712], decided by this Court December 6, 1954. We have not considered the merits of these cases, nor have we determined their relation to our recent opinions, supra, believing that reexamination by the Courts of Appeals is desirable even in those cases remotely involving the principles laid down in the net worth decisions. Mr. Justice Black dissents.

 

 

[53-2 USTC ¶9549]Austin F. McFee, Appellant v. United States of America , Appellee.

(CA-9), In the United States Court of Appeals for the Ninth Circuit., No. 13,482., 206 F2d 872, 08/24/53

Appeal from the United States District Court for the District of Idaho, Northern Division.

Penalties: Trial: Continuance.--Taxpayer was convicted for wilful attempts to evade income taxes. On appeal he urged that the trial court erred in denying him a continuance. Since he was represented by a firm of certified accountants and by counsel for some months prior to indictment, no prejudice resulted to him from the denial of a continuance.

Penalties: Trial: Sufficiency of evidence.--Taxpayer asserted that the Government failed to establish a firm starting point for its determination of his net worth and did not establish the exact source of the unreported income. The Court of Appeals pointed out that the establishment of his net worth as of the beginning of 1945 was thorough. The Government had examined his records and books, bank accounts, court and county records to determine if there were any possible sources of funds. The proof of the exact amount or precise source of unreported income is not required.

Privileged communications: Attorney and client relationship.--Two lawyers who had on different occasions represented taxpayer testified, under objection, that taxpayer had given them cash with which to purchase cashier's checks. The Court of Appeals saw no confidential relationship of an attorney and client in such transactions.

Penalties: Trial: Failure of court to give requested instructions.--Taxpayer assigned as error the failure of the trial court to give a requested instruction on circumstantial evidence. The Court of Appeals found that the instructions given by the court on circumstantial evidence stated the law with much more clarity than did the proffered instruction which was rejected.

Penalties: Trial: Comment of court.--Taxpayer assigned as error certain statements of the trial court. The Court of Appeals felt that, viewing the instructions of the court as a whole, the jury was clearly informed that it was free to perform its fact-finding functions.

Penalties: Trial: Admissibility of evidence: Admissions.--Error was claimed in the admission of the testimony of revenue agents as to statements made to them by taxpayer. The Court of Appeals found that independent evidence not only substantially corroborated the admissions but established the corpus delicti.

Harold S. Purdy, Coeur d'Alene, Ida., J.F. Emigh, Butte, Mont., Elden McFarland, Washington, D.C., James P. Keane, Wallace, Ida., for appellant. H. Brian Holland, Assistant Attorney General, Ellis N. Slack, Meyer Rothwacks, John Lockley, Special Assistants to the Attorney General, Washington, D.C., John A. Carver, United States Attorney, Boise, Ida., Dudley L. Wilson, Special Assistant to United States Attorney, Spokane, Wash., W.W. Patten, Special Assistant to United States Attorney, Seattle, Wash., John Lockley, Attorney, Department of Justice, Washington, D.C., for appellee.

Before: MATHEWS, HEALY and ORR, Circuit Judges.

ORR, Circuit Judge:

Appellant was tried and convicted by a jury on two counts of an indictment for wilful attempts to defeat and evade income taxes due and owing by him for the years 1945 and 1946 in violation of §145(b) of the Internal Revenue Code, 26 U.S.C.A. §145(b). He was sentenced to imprisonment for one year and six months and a fine of $7,500 on each count, the terms of imprisonment to run concurrently; the imprisonment on count two to be suspended and appellant placed on probation for two years commencing after service of sentence on count one on the condition that appellant pay the amounts due the government on income tax.

The judgment is challenged upon numerous grounds and we consider each contention in the order set forth in appellant's brief. The pertinent facts are set out in our consideration of each assignment of error.

[Continuance Denied]

 

I. Denial of Continuance. Appellant urges that the trial court erred in denying him a continuance. The indictment was returned November 8, 1951. Appellant was arrested November 17, 1951. He was arraigned April 1, 1952 and on that date the case was set for trial for April 22, 1952. On April 1, 1952 appellant asked for a bill of particulars. The bill of particulars was furnished April 2, 1952. Appellant asserts that it was not until then that he and his attorneys were advised that the Government had adopted the expenditure method of computing his income and tax. On April 4th he moved for a continuance and supported his motion with affidavits made by each of his two attorneys wherein they detailed certain investigations which they desired to make and to cause to be made in preparation for trial, which investigations, they averred, could not be accomplished within the time remaining before trial. "It is elementary that a matter of continuance rests in the sound discretion of the trial court, and its action in that respect is not ordinarily reviewable. It would take an extreme case to make the action of the trial court in such a case a denial of due process of law." Franklin v. State of South Carolina , 218 U.S. 161, 168.

This is by no means an extreme case. The affidavits filed by counsel in support of the motion present no facts from which a reasonable inference could have been drawn that substantial evidence supporting a defense would have been discovered. The showing, at most, was a request for time in which to make a search for new evidence. For some months prior to indictment appellant was represented by a firm of certified public accountants and by counsel. Surely, if a reasonable probability existed that a continuance would have enabled appellant to procure evidence not then known to him, a better showing would be expected in view of the expert assistance he had at hand and because of their presumed familiarity with his affairs. We see no prejudice resulting to appellant from the denial of a continuance. As a matter of fact the trial court exercised its discretion wisely by furthering an expeditious trial of the case. Such action is to be encouraged where, as here, the rights of a defendant are not jeopardized.

[Evidence Was Substantial]

 

II. Sufficiency of the Evidence. In determining appellant's income the Government used both the expenditure and net worth methods. The two computations are merely accounting variations of the same basic method, the expenditure theory being an outgrowth of the net worth method. U.S. v. Caserta , 3 Cir. 1952, 199 Fed. (2d) 905 [52-2 USTC ¶9540]. Both involve a determination of the taxpayer's net worth at the beginning and end of a period in order to foreclose the possibility that the expenditures were made or the net worth increases were derived from prior accumulated funds. The underlying theory of the expenditure method is that if expenditures exceed reported income for the period and net worth has remained constant or changes otherwise accounted for, an inference may be drawn that total income was not properly reported. The theory of the net worth method is that if a taxpayer's net worth at the end of a particular period is greater than his net worth at the beginning of the period, and such increment is not attributed to gifts, devises, loans, or other non-income sources, the conclusion may be drawn that the increase in net worth represents income to the taxpayer. The net worth and expenditure computations of the Government both tended to show that appellant had failed to report taxable income of $79,911.23 in 1945 and $70,769.76 in 1946.

Appellant does not deny that his expenditures for the two years in question greatly exceeded his reported gross incomes. He asserts, however, that the Government's case must fall because it failed to establish a firm starting point for its determination of his net worth. He challenges the accuracy of the prosecution's computations first on the ground that the Government failed to exclude the hypothesis of funds other than income from which the substantial expenditures could have been made, and second, on the ground that certain known assets were omitted from the net worth statements.

Appellant contends, and we agree, that in a net worth case the Government must establish with a reasonable degree of accuracy the taxpayer's net worth at the beginning and end of the period in question. We think this requirement was fully and adequately met in this case. There is no exclusive set of circumstances to foreclose the prior accumulation hypothesis. How much evidence must be offered by the prosecution before the trial court can properly submit the case to the jury depends upon the facts of the particular case. Remmer v. United States , 9 Cir., May 28, 1953, 205 Fed. (2d) 277 [53-1 USTC ¶9421]. The Government is not required to refute all possible speculations as to the sources of funds from which the expenditures might have been made. Gariepy v. United States , 6 Cir. 1951, 189 Fed. (2d) 459 [51-1 USTC ¶9318]. We view the evidence in the light most favorable to the Government and affirm if the evidence is sufficient to justify the jury in finding therefrom, beyond a reasonable doubt, that there has been a wilful attempt to evade taxes. Gendelman v. United States , 9 Cir. 1951, 191 Fed. (2d) 993 [51-2 USTC ¶9474].

In the instant case the establishment of appellant's net worth as of the beginning of the year 1945 was thorough and in detail. The revenue agents began their inquiry with the year 1935 and traced appellant's financial history through 1946. There was evidence that in 1934 and 1935 appellant moved from a $1.50 a day hotel room to the back room of a cinderblock building where he cooked his own meals to save expenses, that he was employed in a meat market at $50 to $60 a week, that he began the operation of North Idaho Sales Company about 1936 in partnership with his daughter with a maximum capital investment of $2,000, that the bank account was not always sufficient to cover a $12 a week check paid to an employee, that he filed no income tax returns in Idaho prior to 1936. From these facts the jury was entitled to infer that appellant was not in the possession of substantial assets as of the year 1935. The Government produced appellant's income tax returns and established the amount of income reported for the years 1936 to 1945 to negative the likelihood of his having accumulated a large surplus in those years. The agents examined appellant's records and books, bank accounts, court and county records to determine if there were any other possible sources of funds. He was given credit for all known borrowings and such amounts were eliminated from the income computations. The investigation was as full and complete as the Government could be reasonably required to make.

This evidence is substantial. The net worth computation was necessarily an estimate but, as such, was competent for the consideration of the jury. The Government's case is not destroyed by argumentative speculation, unsupported by evidence, that he might have had other substantial assets not taken into account by the Government. Appellant's voluntary admissions to the revenue agents that he had received no inheritances, that he had no other source of income than the known assets, and that $50,000 was all he had on hand as of January 1, 1942, serve only to corroborate the accuracy of the net worth statements.

[Exact Source of Unreported Income]

 

Another argument of appellant in which we find no substance is that there was fatal variance because the Government did not establish the exact source of the unreported income. The law is clear that proof of the exact amount or precise source of unreported income is not required. Jelaza v. United States , 4 Cir. 1950, 179 Fed. (2d) 202 [50-1 USTC ¶9149]; Gariepy v. United States, 6 Cir. 1951, 189 Fed. (2d) 459 [51-1 USTC ¶9318]. The jury was entitled to infer from the evidence that the unreported income came from one or all of the sources specified in the bill of particulars.

Appellant further attempts to attack the accuracy of the net worth statements by showing that certain known assets were omitted. There was testimony that the revenue agents were advised that appellant in 1943 personally had on hand approximately $114,000 in cash which he spent for liquor and which was not recorded on his business books. Substantial evidence appearing in the record justifies the inference that no such asset existed. The revenue agent testified that he did not give appellant credit for this item because it represented numerous purchases of whiskey and not a single transaction. Any whiskey on hand in 1945 was included in the net worth statement as inventory. He further testified that appellant informed him that this item would be accounted for on the Foresters Club books and that it related to whiskey inventory turnover. The contradictory and highly questionable testimony of R.E. McDonnell was the only affirmative evidence concerning this transaction. At one point during his testimony the trial court found it necessary to caution the witness against testifying falsely. The jury no doubt disbelieved McDonnell.

Two other items allegedly improperly omitted need no extended treatment since, even if we were to assume that appellant's contention is correct, the total amount involved could not affect the result. The challenged items amount to approximately $23,000 whereas the Government computations disclose a failure to report approximately $80,000 in 1945 and $70,000 in 1946. The Government is not required to prove the defendant's guilt to a mathematical certainty. Schuermann v. United States , 8 Cir. 1949, 174 Fed. (2d) 397 [49-1 USTC ¶9281].

Appellant also claims that the two net worth statements were highly prejudicial to him because they both contain entries showing that he paid no income tax in 1945 or 1946 when in fact he did pay taxes for these two years. It is true that appellant overpaid his income taxes in 1944 and received a credit of $25,879.94 which was applied to his 1945 and 1946 taxes. The record does not disclose the year in which he received the income tax credit. Appellant concedes, however, that the treatment given this item by Government accounts had no affect [sic] whatever on the net worth computation. His complaint is that it was prejudicial to send to the jury statements which showed that he had paid no federal income tax during the two years in issue. We find no merit in this contention. It is clear that the jury had before it abundant evidence that appellant had paid taxes in these years. Appellant himself introduced a letter from the Treasury Department crediting him with the overpayment of his taxes. His income tax returns were in evidence and there was testimony by a revenue agent that appellant had applied the tax refund to his 1945 and 1946 taxes.

III. Confidential Communications. Two lawyers, Messrs. Keane and Stern, who had on different occasions represented appellant, were called as witnesses by the Government and requested to testify. They made objection on the ground that the matters concerning which they were questioned were privileged because at that time the relationship of attorney and client existed between them and appellant. Their objections were overruled and answers were then given. Lawyer Keane testified to the effect that he had obtained $12,500 in currency from appellant on January 28, 1946, with instructions to purchase a cashier's check; that he had his secretary do so, and that another $3,000 check was handled the same way. On March 21, 1946, he received another $9,000, mostly in currency, of which he paid $7,500 for a cashier's check and gave $1,500 to Stern. He also testified about a $5,500 note receivable and a $4,700 check payable to McDonald, for which appellant advanced funds.

Lawyer Stern testified to the effect that he deposited $12,500 in the Dakota National Bank at Fargo , North Dakota , which was used partially to make payments to the District Court of the United States . He testified that he cashed a $3,000 check and gave the funds to appellant.

The Government's purpose in eliciting the evidence from the lawyers was to show as a part of the expenditures that the sum of $16,500 was used by appellant in payment of fines in 1946.

We see no confidential relationship between attorney and client in the above transaction. The attorneys acted in the capacity of a transmitter, not as lawyers giving legal advice. The lawyers stand in the same relation as would a banker had one been commissioned by appellant to carry out what appears to be no more than clerical and messenger service. Pollock v. United States , 5 Cir. 1953, 202 Fed. (2d) 281 [53-1 USTC ¶9229]; cf. United States v. De Vasto, 2 Cir. 1931, 52 Fed. (2d) 26.

[Requested Instructions Not Given]

 

IV. Failure of Court to give requested instructions on circumstantial evidence. Appellant assigns as error the failure of the Court to give a requested instruction on circumstantial evidence.

Appellant makes a statement on page 21 of his brief that he excepted to the instructions given by the Court on circumstantial evidence. After setting out the instructions given by the Court it is stated:

"Counsel for defendant excepted to the above instructions as follows:

"Mr. Emigh. We would like an exception to the failure of the Court to give the requested instruction that not only must the evidence prove guilt but that it must prove the hypothesis of guilt to the exclusion of all other hypothesis.

"The Court. You may have your exception."

It is apparent that the exception was directed to a requested instruction not given by the Court and not to the instructions given. The instructions given by the Court on circumstantial evidence, to which no exception was taken, states the law with much more clarity and force than does the alleged proffered instruction which the Court rejected. The jury was adequately instructed on this point.

V. Comment of the Court. During the course of its instructions to the jury the Court stated:

"You are instructed that if you find substantial evidence outside of the defendant's own statements consisting of increase of net worth during the taxable years or any absence of personal records or books of account or the failure of books and records to show fully its transactions or those of the defendant then this body of testimony derives support from the defendant's failure to offset or explain the discrepancy through whatever means he might do so.

"I don't want to comment on the evidence but there is one outstanding matter that you are left in the dark about, I don't intend to make any inference about it, as the evidence here is solely for you. But where are the tickets that should show the receipts and division of the money taken from the slot machines for the years 1945 and 1946. There was only one of these books of tickets introduced in evidence by the defense. None of the witnesses, bookkeeper, manager or other witnesses for the defense produced these tickets and all said they had no knowledge of these tickets. The tickets were traced to the possession of defendant McFee. It seems to the Court that if the tickets balanced with the bank account that it would have been an easy matter for the defense to produce the tickets if they have not been destroyed. Why were they not produced to show the receipts of the slot machines for these years?"

Appellant objected to the statements of the Court concerning the "tickets" and has assigned it as error.

The Court further charged the jury as follows:

"Ladies and Gentlemen of the Jury; when I instructed you I made some comment concerning the failure of the defendant to produce these sales slips or tickets, check on the slot machines, or receipts from the slot machines. You understand that you are not to draw any inference from the Court's remarks, these are questions of fact for the jury, and you are not to be influenced by any remarks by the Court as to what the Court thinks about the testimony."

And the Court gave the further cautionary instruction:

"If the Court has inferred, or if you should have gathered during the trial of the case that the Court has some opinion as to the facts in this case you will disregard that entirely. The matter of the guilt or innocence of the defendant as based on the facts presented to you here is a matter for your determination and yours alone and the Court has not intended to infer at any time that he had any feeling on the matter."

Other instructions were given where the function of the jury to pass upon the facts of the case was stressed.

Viewing the instructions of the Court as a whole, the statements complained of were not beyond the bounds of judicial propriety. United States v. Aaron, 2 Cir. 1951, 190 Fed. (2d) 144, cert. denied, sub nomine Freidus v. United States, 342 U.S. 827; Todorow v. United States, 9 Cir. 1949, 173 Fed. (2d) 439, cert. denied, 337 U.S. 925; Simon v. United States, 4 Cir. 1941, 123 Fed. (2d) 80, cert. denied 314 U.S. 694. It is obvious that the jury was clearly informed that it was left free to perform its fact-finding functions.

[Admissions to Revenue Agents]

 

VI. Admissibility of evidence of admissions. Error is claimed in the admission of the testimony of agents of the Bureau of Internal Revenue as to statements made to them by appellant. This testimony, asserts appellant, was inadmissible because there is in the record no substantial independent proof of the corpus delicti. A reading of the record convinces us that not only does the independent evidence substantially corroborate the admissions, (which in this circuit is sufficient, Davena v. United States, 9 Cir. 1952, 198 Fed. (2d) 230 [52-2 USTC ¶9392]) but, contrary to appellant's contention, goes further and establishes the corpus delicti by competent independent evidence.

Judgment affirmed.

 

 

[47-2 USTC ¶9353]J. Mills Newton , Appellant v. United States of America , Appellee

(CA-4), United States Circuit Court of Appeals, Fourth Circuit, No. 5593, 162 F2d 795, Argued June 16, 1947. Decided July 28, 1947

Appeal from the District Court of the United States for the Western District of Virginia, at Danville.

Criminal action: Proper venue.--In a criminal action brought under Code Sec. 3793(b)(1) charging assistance in preparation of a fraudulent return, it was held that the defendant was properly tried in the Western District of Virginia, although the returns in question were filed at Richmond in the Eastern District of Virginia, since the activities described in the offense charged against him took place in the Western District of Virginia.

Criminal action: Sufficiency of indictment.--An indictment under Code Sec. 3793(b)(1) charging that the defendant "unlawfully and feloniously did wilfully aid in * * * the preparation * * * of a false and fraudulent claim" was deemed sufficient since it followed nearly the language of the statute. Other objections to the indictment were held purely modal, and in no way prejudiced any of the defendant's rights.

Criminal action: Denial of a continuance of trial.--Where the trial judge in a criminal action under Code Sec. 3793(b)(1) (charging assistance in preparation of a fraudulent return) denied the defendant's motion for a second continuance on the ground of the physical condition of himself and a witness, it was held that such denial was not an abuse of discretion, in view of the evidence heard on the motion.

Criminal action: Charge to the jury.--In the trial of a criminal action brought under Code Sec. 3793(b)(1), for assisting in the preparation of a fraudulent return, the judge's charge to the jury was held to be fair to the accused. His comments to the jury on the evidence was a proper function of a federal judge. Affirming the decision of the District Court, reported at 68 Fed. Supp. 952.

J. Mills Newton, pro se, on brief; and Howard C. Gilmer, Jr., Acting U. S. Attorney, (Henry T. Clement, Assistant U. S. Attorney, on brief) for appellee.

Before PARKER, SOPER and DOBIE, Circuit Judges.

DOBIE, Circuit Judge:

J. Mills Newton was tried, convicted and sentenced in the United States District Court for the Western District of Virginia (sitting at Danville, the residence of Newton), under an indictment in twenty counts, charging violations of 26 U. S. C. A. §3793(b)(1). The pertinent part of that section reads:

"Any person who willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a false or fraudulent return, affidavit, claim, or document, shall (whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim or document) be guilty of a felony, * * *."

The first count of the indictment, which is altogether typical, charges in part:

"That on or about the 24th day of May, 1945, in the City of Danville, in the Western District of Virginia, J. Mills Newton unlawfully and feloniously did wilfully aid and assist in, and procure, counsel and advise the preparation under, and in connection with a matter arising under, the Internal Revenue laws, of a false and fraudulent claim in the sum of $79.61, based upon amended income tax returns for the years 1942 and 1943, of Cooper T. Garner and Lizzie Garner * * *, and which claim was filed with the Collector of Internal Revenue for the District of Virginia."

Of the multitudinous points made by Newton , we think only four need be considered and discussed by us: (1) Improper venue; (2) Insufficiency of the indictment; (3) Denial of a continuance; (4) Charge to the jury.

Venue

This point was discussed ably and at great length by Judge Barksdale below. 68 Fed. Supp. 952. We deem it necessary to add little to what Judge Barksdale has there written. Newton's contention here is that since the returns were filed at Richmond, as was required by law, in the Eastern District of Virginia, if he has committed any federal crime, this crime was therefore committed in the Eastern District of Virginia, and he could not be tried therefor (as he was tried) in the Western District of Virginia.

Any expressions in the opinion of Judge Learned Hand in U. S. v. Kelley, 105 Fed. (2d) 912, 916 [39-2 USTC ¶9621], relied upon by Newton, which seem to be inconsistent with our view here, are not controlling for the reasons stated in the opinion of Judge Barksdale, 68 Fed. Supp. at pages 955, 956. And we regard as particularly significant in this connection, the provisions of §42 of the Judicial Code, 28 U. S. C. A. 103, which provide that an offense begun in one District and completed in another, may be tried in either District.

In Dobie on Federal Procedure, §127, page 511, it is stated:

"All federal crimes are statutory, and these crimes are often defined, hidden away amid pompous verbosity, in terms of a single verb. That essential verb usually contains the key to the solution of the question: In what district was the crime committed? Without the exact language of the statute, particularly this verb, paraphrases and loose citations in this field are more than inaccurate; they are positively misleading. When, as is so often the case, the statute enumerates several such verbs, only scrupulous, even meticulous, nicety in exact quotation can prevent these statutes, as well as the decisions under them, from proving a snare and a delusion to the unwary."

In the instant case, the key verbs in the statute (set out above) are "aids," "assists in," "procures," "counsels" or "advises" the preparation or presentation of a false or fraudulent return, affidavit, claim or document. Certainly all the activities of Newton connoted by these statutory key verbs took place in the Western District of Virginia. In addition to the cases cited in the opinion below, see Burton v. United States, 196 U. S. 283, 202 U. S. 344; Horner v. United States, 143 U. S. 207; n re Palliser, 136 U. S. 257; United States v. Andrade, 16 Fed. (2d) 776; Hart v. United States , 11 Fed. (2d) 499.

Insufficiency of the Indictment

Newton attacks the validity of the indictment on numerous grounds. One ground is the failure of the indictment to charge "that the accused knew that the claims and returns were false and fraudulent." The indictment does, however, charge that Newton "unlawfully and feloniously did wilfully aid in * * * the preparation * * * of a false and fraudulent claim." This follows quite closely the language of the statute and is utterly inconsistent with a lack of guilty knowledge on Newton 's part.

The contention of duplicity, we find utterly lacking in merit. The only count in the indictment to which this objection might fairly be made was the seventh count, and, on this count the Government formally entered a nolle prosequi. While the indictment could hardly serve as a model, Newton 's objections to it are purely modal, and the indictment in no way prejudiced any of his substantial rights.

Although we think that the indictment does meet all essential requirements, it would have been desirable to state in the indictment, with greater particularity, the facts and circumstances, disclosing particularly wherein the claim of $79.61 was false and fraudulent. It may be noted, too, that Newton , though he moved for a dismissal of the indictment, did not ask for a bill of particulars. As was said by Judge Rose, speaking for our Court in Martin v. U. S., 299 Fed. 287:

"The sufficiency of a criminal pleading should be determined by practical, as distinguished from purely technical, considerations. Does it, under all the circumstances of the case, tell the defendant all that he needs to know for his defense, and does it so specify that with which he is charged that he will be in no danger of being a second time put in jeopardy? If so, it should be held good."

Denial of a Continuance

Newton further complains of the conduct of the trial judge in denying him a further continuance. The grounds on which this continuance was sought were the physical condition of Newton himself and the physical condition of his daughter, Mrs. Coyle, who was unable to travel to Danville , and who, according to Newton 's claim, was an important witness on his behalf.

One continuance had already been granted to Newton on account of the inability of Mrs. Coyle to testify. There was no clear showing as to when she would be able to testify and the first indictment against Newton had been handed down nearly a year before the instant trial. At the trial, too, it appeared that the evidence of Mrs. Coyle would have been of very little, if any, benefit to Newton .

Judge Barksdale heard testimony, on the motion for a continuance, as to the physical condition of Newton and Mrs. Coyle and as to the likelihood of the attendance of Mrs. Coyle in case a continuance should be granted. The Government opposed the continuance and noted certain dilatory tactics on the part of Newton to postpone his trial as long as possible.

The granting of continuances in a federal criminal trial is peculiarly a matter vested in the sound discretion of the trial judge. We certainly cannot say here that Judge Barksdale abused his discretion in denying a second continuance.

The Charge to the Jury

Several complaints are made by Newton as to the judge's charge to the jury. A careful reading of this charge has convinced us that it clearly stated the applicable law and accurately covered every essential element of the offenses charged. It was eminently fair, in every way, to the accused.

The trial judge's comments to the jury on the evidence were given for the purpose of clarifying the numerous issues involved and aiding the jury to arrive at a just verdict. This is a proper function of a federal judge.

Judge Barksdale went out of his way more than once to tell the jury that these comments were not binding on the jury and that the jury was the sole judge of the credibility of the witnesses and the weight to be given to their evidence.

We are convinced that Newton was convicted in a trial that was fairly conducted, without prejudice to any of his rights. The judgment of the District Court is accordingly affirmed.

Affirmed.

 

 

[54-1 USTC ¶9105]Ernest Michael Schino and Martin M. Hartmann, Appellants v. United States of America , Appellee

(CA-9), In the United States Court of Appeals for the Ninth Circuit, No. 13,375, 209 F2d 67, December 2, 1953

Appeals from the United States District Court for the Northern District of California, Southern Division.

Fraud: Prosecution: Sufficiency of indictment.--An indictment charging conspiracy to defraud the United States is sufficient, whether or not such unlawful object was attained, where it gives the gist of the offense of conspiracy, the agreement to commit an unlawful act, and the means by which the agreement was to be achieved. It is not necessary to state with particularity the time, place, circumstances, etc., in stating the manner and means of effecting the object of the conspiracy.

Fraud: Trial: Denial of bill of particulars.--The trial court's action on an application for a bill of particulars is discretionary. Hence, where the defendants at no stage in the proceedings were taken by surprise, made no claim to the contrary, and their substantial rights were not in any way prejudiced by the denial of a motion for bills of particulars, there was no abuse by the court of its discretion.

Fraud: Trial: Refusal of continuance.--Where a motion to postpone trial was based on grounds of adverse comments in newspaper articles referred to in the briefs but not put in evidence, denial of the continuance was not prejudicial error. U. S. v. Moran, (CA-2) 194 Fed. (2d) 623, followed. Delaney v. U. S. , (CA-1) 199 Fed. (2d) 107, distinguished.

Fraud: Prosecution: Prosecutor's argument to jury.--An argument by the prosecuting attorney to the jury which is based upon the evidence or upon reasonable inferences therefrom, or which, even though otherwise improper, is in reply to such argument as made by defendant's counsel, is proper.

Fraud: Jury trial: Sufficiency of evidence.--The evidence was sufficient to support the verdict of guilty where it was such that a juror could reasonably conclude that the evidence would exclude every reasonable hypothesis but that of guilt. It is an invalid theory, at least on motion for judgment of acquittal, that in a circumstantial evidence case a conviction cannot be supported if the evidence is as consistent with innocence as with guilt.

Fraud: Jury trial: Exclusion of evidence.--Certain evidence which the jury was instructed to disregard was contended on appeal to have been prejudicial to the defendants. However, the subject of prejudicial effect of such exclusion was not even remotely suggested at any time during the trial, and no motion on this account was made for a mistrial at the close of the case. Under these circumstances, it was a case where an error of admission of irrelevant evidence was cured by instruction to the jury to disregard it. Objections to evidence admitted were found to be without merit in the light of the rule that in a conspiracy case wide latitude is allowed in presenting evidence, whereby it is within the discretion of the trial court to admit evidence which even remotely tends to establish the conspiracy charged.

Fraud: Trial: Instructions to jury: Definition of "conspiracy".--There was no error of failing to properly instruct the jury on the meaning of the term "conspiracy" where, in essence, the jury was told by the trial court that the term as applied in this case meant two or more persons acting pursuant to an agreement to impair, obstruct, or defeat the lawful function of the United States Government by dishonest means.

A. J. Zirpoli, and C. Harold Underwood, San Francisco , Calif. , for appellant Schino. Morgan V. Spicer and H. R. Whiting, San Francisco , Calif. , for appellant Hartmann. M. Mitchell Bourquin, Special Assistant to United States Attorney, Thomas W. Martin, Assistant United States Attorney, San Francisco, Calif., for appellee.

Before DENMAN, Chief Judge, and ORR and POPE, Circuit Judges.

DENMAN, Chief Judge:

This is an appeal by two of three defendants from a judgment convicting them of conspiring to defraud the government by impairing its process of collecting and assessing federal taxes.

The parties have assigned many errors of the trial court for this appeal. These may be summarized as follows: (1) Sufficiency of the indictment; (2) denial of request for a bill of particulars; (3) refusal of a continuance because of the approaching pendency of hearings before the King Subcommittee which might have bearing on many matters involved in the trial; (4) improper remarks of prosecuting attorney in argument to jury; (5) sufficiency of the evidence to support the verdict; (6) admissibility of evidence as to similar transactions; and (7) instructions to the jury.

The essence of the scheme, as developed by the government's evidence, is as follows: Gertrude Jenkins, a convicted abortionist, was in tax difficulties. She contacted appellant Hartmann who told her that he could get it "fixed" for $5,000 so that she would not be criminally or civilly prosecuted. Hartmann contacted defendant Mooney (not an appellant), Chief Field Deputy of the Collector of Internal Revenue for the State of Nevada, and asked him if he could "fix" appellant Schino, Chief Field Deputy of the Collector of Internal Revenue for the First District of California. The answer was affirmative. Mooney later took Hartmann to meet Schino. Schino was, as he had done in other cases, to compel his subordinates in the San Francisco office to tamper with and suppress the assessment and penalty against Mrs. Jenkins. In exchange, Mrs. Jenkins was to pay $5,000, and did pay it, for worthless shares of stock in the Mountain City Consolidated Copper Co., a corporation controlled by Mooney. Schino and Hartmann were to share in this $5,000. The failure of the scheme was not the fault of the conspirators, but rather resulted because of a contemporaneous investigation of the Internal Revenue Bureau then under way.

(A) The Indictment:

The indictment charges appellants and one Patrick Mooney--

". . . did . . . conspire together, and with Gertrude Jenkins, also known as Ann Scott, and with others to said Grand Jury unknown, with the intent and purpose to defraud the United States in the exercise of its governmental powers by impairing, obstructing and interfering with the lawful function of a Department of the United States, to-wit, the Bureau of Internal Revenue of the Treasury Department, by attempting corruptly to influence and prevent said Bureau of Internal Revenue from proceeding civilly against said Gertrude Jenkins and prosecuting her criminally for income taxes due, owing and unpaid by her to the United States in the sum of $45,000.00, approximately, for the calendar tax years of 1944 and 1945; . . ."

Appellants admit there was an overt act but attack the indictment in that it does not state the essential facts constituting the offense charged, but merely the legal conclusions of the pleader. The indictment is not defective in that regard. It charges that the appellants "conspired" (i.e., "agreed") to defraud the government (unlawful object) by attempting corruptly to influence and prevent the Bureau of Internal Revenue from proceeding against Gertrude Jenkins (the means). This indictment gives the gist of the offense of conspiracy, the agreement to commit an unlawful act and the means by which that agreement was to be achieved. United States v. Falcone, 311 U. S. 205, 210. "The particularity of time, place, circumstances, causes, etc., in stating the manner and means of effecting the object of the conspiracy for which [appellants] contend, is not essential to an indictment." Glasser v. United States , 315 U. S. 60, 66.

Appellant Hartmann argues that the prosecuting of either civil or criminal actions against taxpayers is not a function of the Bureau of Internal Revenue but rather is a function of the Department of Justice. 28 U. S. C. §502. It is argued that since the indictment charged interference with a function not attributable to the department indicated, no crime has been charged. The short answer to this contention is that no suit regarding taxes can be commenced unless the Commissioner of Internal Revenue, the head of the Bureau, authorizes it. 26 U. S. C. §3740. Thus, if influence is successfully brought to bear upon the Commissioner through his underlings, a suit will be prevented.

Hartmann then argues that even if prosecution of suits be a function of the Bureau, there is no allegation that the Bureau intended so to prosecute or that the parties knew of such intention if it existed, so that the indictment is defective. This contention is also without merit. The indictment is sufficient if it alleges that an unlawful object was sought, whether or not such unlawful object was attained. United States v. Manton, 107 Fed. (2d) 834 (Cir. 2), cert. den., 309 U. S. 664.

(B) Denial of the Bill of Particulars:

Appellants moved for bills of particulars which were denied. In testing the validity of this denial, it must be borne in mind that the trial court's action on a bill of particulars is discretionary and should not be disturbed, in the absence of an abuse of that discretion. Wong Tai v. United States , 273 U. S. 77, 82; Himmelfarb v. United States , 175 Fed. (2d) 924, 935 (Cir. 9) [49-1 USTC ¶9313].

Appellant Schino's attorney, in making an objection to the admission of evidence, stated that he did so "partly on my understanding of what the facts will be"; and further stated "the indictment in this case specifically outlines the nature of the conspiracy." As stated by the district court in its opinion below: ". . . in a trial lasting three weeks, the defendants had ample opportunity, in the event that they were taken by surprise, to ask for a continuance, so that they might prepare to meet the unexpected evidence. No such continuance, however, was requested. As a matter of fact, the defendants at no stage of the proceedings were taken by surprise, nor do they now make such a claim." Where the record thus shows that the defendants were not taken by surprise in the progress of the trial or that their substantial rights have not been prejudiced in any way by the denial of the bill of particulars, there has been no abuse of discretion. Wong Tai v. United States, supra.

(C) Refusal of Continuance of the Date for Trial.

A motion was made on January 24, 1952, to postpone the trial in this cause which was scheduled to commence on February 11, 1952. The ground of the motion was that the Subcommittee on the Administration of the Internal Revenue Laws of the Ways and Means Committee of the House of Representatives of the United States , popularly known as the King Subcommittee, was scheduled to commence hearings on February 4, 1952, on the operations of the San Francisco offices of the Internal Revenue Bureau. Because two of the defendants were officers of the Bureau and because the King Subcommittee intended to investigate, according to newspaper reports, the Mountain City Consolidated Copper Company of Nevada, a concern which allegedly was controlled by Bureau officials who sold its worthless stock at high prices to persons for whom they had done favors, appellant Schino sought the continuance, in which motion appellant Hartmann joined. This continuance was denied.

Appellants assert that the denial of the continuance was highly prejudicial error. They refer not only to the facts above asserted, but also seek to have the court take judicial notice of widespread newspaper and radio coverage relating to the local Bureau "scandals," not contained in the record. Principal reliance is placed upon the case of Delaney v. United States, 199 Fed. (2d) 107 (Cir. 1). In that case, it was held prejudicial error for the court to proceed to trial where prior thereto the King Subcommittee had heard evidence relating to Delaney's affairs which ranged far beyond the scope of the indictment and was highly damaging. These hearings resulted in widespread national publicity adverse to Delaney which extended up to and beyond the time of trial. The court found in detail the mass of newspaper comment and held that by the release prior to trial of such adverse publicity by a branch of the United States (albeit not the prosecuting branch), the United States, as the party plaintiff, "must accept the consequences that the judicial department, charged with the duty of assuring the defendant a fair trial before an impartial jury, may find it necessary to postpone the trial until by lapse of time the danger of the prejudice may reasonably be thought to have been substantially removed." 199 Fed. (2d) at 114.

In their argument here, attempting to show prejudice or the lack thereof, all parties have alleged facts concerning alleged newspaper comment outside the record. Both appellants cited the denial of the continuance of the date of trial as a ground for a new trial, but the argument on the motion was not reported and the district judge did not refer to this contention in his ruling on the motion. Appellants contend that the state of the record is such that the affidavit of Schino's counsel, joined in by Hartmann, being untraversed, must be accepted as true. The only report of a newspaper comment shown by the record is an excerpt from an article appearing in the San Francisco Examiner of January 5, 1952, of which no complaint was made in appellants' briefs. Instead, the briefs refer to several newspaper articles not put in evidence, of which we cannot take notice.

In this state of the record, the comment of Chief Judge Swan, writing for the court, in United States v. Moran, 194 Fed. (2d) 623, at 625 (Cir. 2), is apropos. "Neither the Committee's reports nor the newspapers' comments on it are in the record, so that we cannot judge whether they supplied any basis for counsel's apprehension." Compare Delaney v. United States , supra, where the motion for a continuance was based upon an "affidavit with accompanying exhibits" showing in detail the adverse newspaper comment. 199 Fed. (2d) at 111, 112.

(D) Prosecutor's Argument to Jury:

In his closing argument to the jury, the prosecuting attorney made the following statement:

"Let me say this to you on the matter: You've got to think about this, this is your business just as much as it is mine, and I am beginning to think it is a good deal of the business of all of us to get started sometime to get into this mess, and the longer you put it off the worse it is going to get. If those poor little people up in that revenue office up there that you saw march in front of you in the court room and confess they were pushed around by this man--

"Mr. Zirpoli: I think that is an improper plea.

"Mr. Bourquin: I don't think it is.

"Mr. Zirpoli: I think it is.

"The Court: Proceed.

"Mr. Zirpoli: All right.

"Mr. Bourquin: If those poor people like the Christopherson girl, poor little Wulff, and poor McGowan, and the rest of them [lower echelon employees under Schino] will see that you ladies and gentlemen, out in the open under no obligation to these people, not afraid of these characters, if they are going to find you will wink at this thing and put it aside, they are going to lose all hope, they are not going to rehabilitate themselves, and you are not going to be fair with them to do that. This isn't your work, but it isn't my work any more than it is yours, this work, and you know that I never prosecuted a criminal case, I spent my time for ten years defending the Government in cases, but I regard this as a defense of the Government and the people and to defend those little people that have been pushed around by bullies thinking the department is run for themselves and for their own ends; Mooney for his stock, and Schino for his family, or whatever he wants, and Hartmann for stock, or anything else. You have got to make it, look at, to take notice of those things, you've got to fight those things as you heard in this Court if you are going to expect it to stop.

"Now, I make that--I leave the case with you in that vein. I am very serious about it. I will extend to you now my appreciation for the patience you have shown in standing here talking to you longer than I assured you I would in the first place, and I leave the case and the determination of it to your good judgment."

Appellant Schino contends that this impassioned appeal to public responsibility in a period of great national and local concern was plainly unwarranted and clearly injurious, since it denied the accused the safeguard of a fair trial and constituted reversible error.

Appellant is again relying upon the publicity background of the trial without having in the record anything to bear out the alleged prejudicial publicity. The prejudicial character of this argument to the jury must be determined from the record itself, a court of appeals may not take cognizance of evidence not in the record as transmitted from the district court. Pacific R. R. v. Ketchum, 101 U. S. 289; Siano v. Helvering, 79 Fed. (2d) 444, 446 (Cir. 3); Axelrod v. Osage Oil & Refining Co. , 29 Fed. (2d) 712, 716 (Cir. 8).

This criticized argument of the government had some reference to the evidence in the case. There was evidence tending to show that on occasions Schino had used the power of his position to compel his subordinates to suppress the assessment of taxes and penalties against favored taxpayers. It was made in reply to the argument of Schino's counsel in which he tried to picture Schino as an officer of the Bureau who was doing his duty and who was not involved in any wrongdoing, and thus invited a rebuttal argument of this nature. An argument to the jury which is based upon the evidence or upon reasonable inferences therefrom, or which, even though otherwise improper, is in reply to such an argument as made by Schino's counsel, is proper. Ochoa v. United States , 167 Fed. (2d) 341, 345 (Cir. 9); Springer v. United States , 148 Fed. (2d) 411, 414 (Cir. 9).

(E) The Sufficiency of the Evidence:

Appellants each assert that, as to himself, the evidence is insufficient to support the verdict. In determining this question, we must consider the evidence in the light most favorable to the government. Glasser v. United States , 315 U. S. 60, 68; Woodard Laboratories v. United States , 198 Fed. (2d) 995 (Cir. 9). Viewed in this light, the state of the evidence is such that a juror's reasonable mind "could find that the evidence excludes every reasonable hypothesis but that of guilt." In such a situation, the case must be submitted to the jury, and their decision is final. Remmer v. United States , 205 Fed. (2d) 277, 287-288 (Cir. 9), and cases cited. The theory upon which appellants rely, that in a circumstantial evidence case a conviction cannot be supported if the evidence is as consistent with innocence as with guilt, has been laid to rest in this circuit by the Remmer case, at least where, as here, the question arises on a motion for a judgment of acquittal.

(F) The Contention That Excluded Evidence Nevertheless So Prejudiced the Jury That the Case Should Be Reversed.

In an offer of proof, the prosecution claimed that it intended to show by the testimony of one Dorothy Pennington, Henry Rob inson, and Lila Campbell, that appellant Schino had bragged to Dorothy Pennington's former husband that he had saved her a lot of money by manipulations within the Bureau. The court permitted the prosecution to put Mrs. Pennington on the stand because the offer of proof tended to show that her evidence would tend to prove that Schino corruptly attempted to influence and prevent the Bureau from proceeding civilly or criminally against another taxpayer. The evidence which was put in showed that Dorothy Pennington had obtained a favorable tax settlement without having been prosecuted and tended to establish that Schino had bragged that he had done her a favor. However, the court after colloquy with counsel found that the actions shown to have been committed by Schino were just as compatible with innocence and fair and proper dealing as they could be with illegal or criminal dealing.

On the morning following this testimony when it was fresh in the jury's mind and as soon as the jury assembled the court gave its following instruction to disregard the testimony of these three witnesses:

"The Court: Now, ladies and gentlemen of the Jury: There has been heretofore admitted in evidence certain testimony of three witnesses, namely Lila Campbell, Henry Rob inson and Dorothy Pennington. And you will recall that those witnesses testified to their acquaintance with the defendant Schino and to the tax affairs of the Saf-T-Step Company. It is the Court's belief and conclusion that the testimony of those three witnesses in its entirety is of no materiality in this case, and I have granted a motion to strike the testimony of those three witness[es]. The testimony of Lila Campbell, Henry Rob inson and Dorothy Pennington is stricken in toto, and you ladies and gentlemen are to entirely disregard that testimony that is stricken and you are to treat it as if you had never heard it. It has no place and no factor in this case."

The excluded evidence came after the bulk of the prosecution's case was in and the instruction came after the prosecution's case was concluded. To a jury of ordinary competence it was made clear that they were to disregard it.

Furthermore, coming at the end of the government's case, the defendants could have moved immediately for a mistrial on the ground that despite the granting of the motion to exclude the testimony, its effect was so prejudicial that the jury could not fairly consider the other evidence offered. Instead, the defendants accepted the excluded evidence as not of a character to warrant a mistrial and confined themselves solely to a motion for a directed verdict on the claimed insufficiency of the evidence and of the indictment. Thus even had the excluded evidence been thought prejudicial, the failure to move for a new trial caused the time and effort of the court, counsel, and witnesses of the seven days from the presentation of this evidence to the bringing in of the verdict.

Thereafter, no motion for a mistrial was made at the close of the case, nor indeed was the subject of the prejudicial effect of the excluded evidence even remotely suggested at any time during the trial. Clearly the attorneys for the defense when trial keen to any adverse effect did not regard the excluded evidence as prejudicial and treating its presentation and exclusion as within Rule 52(a), Fed. R. Crim. P.

"Rule 52. Harmless Error and Plain Error

"(a) Harmless Error. Any error, defect, irregularity or various which does not affect substantial rights shall be disregarded."

Obviously, there was no such overwhelming prejudice that it should be considered at any stage of the proceedings as in Kotteakos v. United States, 328 U. S. 750, where in fact the court's errors were objected to at the trial.

The judge properly thought so when with the "after look of a Monday morning quarterback" the prejudice was first mentioned in the denied motion for a new trial. It is a clear case where the error of admission of irrelevant evidence is cured by an instruction to the jury to disregard it. Metzler v. United States , 64 Fed. (2d) 203 (Cir. 9); Cavness v. United States , 187 Fed. (2d) 719, 722 (Cir. 9), cert. den., 341 U. S. 719. To hold otherwise would overrule these cases to the confusion of all the circuit's trial judges.

This conclusion is further supported by the authorities of other circuits. The failure to move for a mistrial and the allowance of the week's further proceeding amounts to a waiver of the afterthought contention as was held by the Sixth Circuit in Carter v. Tennessee, 18 Fed. (2d) 850, 853 (Cir. 6), as follows:

"The general rule is clearly that such 'improper argument of a prosecutor is no ground for reversal, where the jury is explicitly directed to disregard it.' Rob ilio v. United States , 291 Fed. 975, 986 (C. C. A. 6). See, also, Copeland v. United States, 55 App. D. C. 106, 2 Fed. (2d) 637. And where, as here, it must be assumed that the court did reprove counsel and properly instruct the jury at the time, such prejudice as was not thereby removed, or could not be removed by such instruction, was, we think, waived by the failure of the defendant to move for a mistrial. He should not thereafter be permitted to apparently consent to the continuance of the trial, which could presumably be discontinued only upon his motion after the jury had been sworn and he once placed in jeopardy, thus taking his chance of a favorable verdict, and if the verdict be 'guilty' then assert it was founded to a material extent upon misconduct of opposing counsel. Cf. Levin v. United States , 5 Fed. (2d) 598, 602 (C. C. A. 9) [on waiver of even constitutional rights]."

In this that court follows this holding in Billiter v. United States, 23 Fed. (2d) 678, 679 (Cir. 6) and in Pharr v. United States , 48 Fed. (2d) 767, 770 (Cir. 6).

The Sixth Circuit did not overrule these prior decisions in Pierce v. United States, 86 Fed. (2d) 949, (Cir. 6), 13 Fed. Supp. 301, a case of overwhelming prejudice as in the Kotteakos case, where instead of respecting the court's rulings the prosecution continued repeatedly to ignore it, as stated at page 952:

"Conveying to the jury by improper questions the suggestion that defendant Pierce had been tried in the federal courts of Alabama; that he could not obtain credit in his home town of Huntsville, Ala., or procure reputable witnesses who resided there to testify to his good character; that United States Senator Bankhead of Alabama, after interviewing Senator McKellar of Tennessee, could not be procured as a character witness for defendant Pierce; that Pierce had transferred property to his wife and son in fraud of creditors; that he had been frequently detained and investigated by law enforcement officials; and that he was under indictment in the state courts of Mississippi and was a fugitive from justice of that state."

Other circuits hold the same as to the waiver of such error by failing to move for a mistrial. See Webb v. United States , 191 Fed. (2d) 512, 516 (Cir. 10); McGuinn v. United States , 191 Fed. (2d) 477, 479 (D. C. Cir.); Jamerson v. United States , 66 Fed. (2d) 569, 572 (Cir. 7); Gerard v. United States , 61 Fed. (2d) 872, 875 (Cir. 7).

The case is entirely different from that of United States v. Sansone, 206 Fed. (2d) 86, 88 (Cir. 2). There strenuous motions were made to exclude or strike repeated prejudicial statements of the prosecution and the trial court instead of granting them, as here, denied them after which, for a week, the government's case was put in with the jury instructed the evidence was not prejudicial. At the end of that week, the trial court reconsidered its decision and ordered the evidence stricken from the record and instructed the jury to disregard it. The defendants interposed what the court of appeals termed a "motion for a new trial" at this point. This motion, made during the course of the trial, was in fact and effect a motion for a mistrial, and preserved the issue for consideration by the court of appeals.

Nor is it like our case of Wolcher v. United States, 200 Fed. (2d) 492, 499 (Cir. 9) [52-2 USTC ¶9547]. There, unlike the instant case with no error claimed in the trial, there were six errors of the trial court stated in detail in the opinion and other errors committed, the cumulative effect of all of which was held sufficient to prejudice the jury.

The government introduced evidence relating to the so-called "Par Soap Company deal." This evidence tended to show that Schino had brought pressure to bear upon his subordinates to juggle the Bureau's books so that it would appear that the Par Soap Co. had paid its taxes on time. This evidence was clearly admissible to show common intent or design on the part of Schino, especially in view of the fact that the transaction occurred a short time prior to the Jenkins transaction. Henderson v. United States , 143 Fed. (2d) 681, 683 (Cir. 9).

Appellants' other objections to evidence admitted have been examined and found to be without merit. It should be borne in mind that in a conspiracy case wide latitude is allowed in presenting evidence and it is within the discretion of the trial court to admit evidence which even remotely tends to establish the conspiracy charged. Nye and Nissen v. United States , 168 Fed. (2d) 846, 857 (Cir. 9), aff'd, 336 U. S. 613.

(G) Instructions to the Jury:

Appellant Hartmann asserts that the court erred in failing properly to instruct the jury on the meaning of the term "conspiracy." Although no exception was taken to the instructions, see Rule 30, Federal Rules of Criminal Procedure, the failure of the court to give an instruction on an essential point of law is plain error which may be noticed under Rule 52(b), Federal Rules of Criminal Procedure. Samuel v. United States , 169 Fed. (2d) 787, 793 (Cir. 9).

The instruction given told the jury, in essence, that the term "conspiracy" as applied to this case meant two or more persons acting pursuant to an agreement to impair, obstruct, or defeat the lawful function of the United States Government by dishonest means. Hartmann has not pointed out in what respect this definition is insufficient, and we can find none.

In addition to the specifications of error discussed above, both parties have assigned the failure of the court to grant their motions for a new trial. Inasmuch as these motions were based on the above specifications of error, there is nothing left to consider concerning the denial of the new trial.

The judgments are affirmed.

 

 

[81-1 USTC ¶9301] United States of America , Appellee v. Bobby J. Bernhardt, Appellant

(CA-8), U. S. Court of Appeals, 8th Circuit, No. 80-1819, 642 F2d 251, 3/5/81, Affirming unreported District Court decision

[Code Sec. 7203]

Crimes: Willful failure to file: Trial: Continuance: Admissibility of evidence: Abuse of discretion.--The court affirmed the taxpayer's conviction on two counts of willful failure to file an income tax return. The trial court had ample justification for and did not abuse its discretion by denying a requested lengthy continuance where there were numerous earlier continuances, the defense counsel could have informed the court of his situation earlier, and the cocounsel should have been prepared to continue. The trial court did not abuse its discretion when it refused to admit evidence of court opinions, on which the defendant allegedly relied, to prove the defendant's lack of intent because the court determined that presenting legal materials would tend to confuse the jury.

Edward G. Warin, United States Attorney, Rob ert F. Kokrda, Assistant United States Attorney, Omaha, Neb. 68101, for appellee. Donald W. MacPherson, John McKindles, Grant & MacPherson, 3900 East Camelback Rd., Phoenix, Ariz. 85018, for appellant.

Before HEANEY, Ross and ARNOLD, Circuit Judges.

PER CURIAM:

Bobby J. Bernhardt was charged with two counts of willful failure to file an income tax return under 26 U. S. C. §7203. Evidence admitted at trial showed that Bernhardt had filed joint returns with his wife from 1968 through 1972 but failed to file a return during either 1973 or 1974. In 1975 Bernhardt submitted a 1973 Form 1040 and a 1974 Form 1040 to the Internal Revenue Service, but both forms contained only the words "none" or "object, self-incrimination" in the space where income information was to be listed. No income information was provided on the forms. Further evidence was introduced to show that Bernhardt had sufficient income in 1973 and 1974 to necessitate the filing of returns.

At trial Bernhardt was represented by Mark McClellan with John McKindles as cocounsel. Trial began on May 6, 1980. On May 12 McKindles moved for a continuance of several days because McCellan would be unable to continue Bernhardt's defense due to a family emergency and McKindles needed time to prepare himself to properly conduct the defense. The court denied the motion for a lengthy continuance but did agree to continue the case until the following morning.

During trial the defense attempted to introduce into evidence a copy of Garner v. United States (no citation given) and other legal references which Bernhardt claimed to have relied upon in determining that he was not required by file a return, tending to show a lack of intent. The trial court denied admission of the materials into evidence on the ground that legal materials could not properly be submitted to the jury, but did permit testimony regarding the content of Garner v. United States . Bernhardt was convicted on two counts of violating Section 7203. On appeal, he alleges that: (1) the trial court abused its discretion in refusing to grant the requested continuance, thus denying his counsel adequate time to prepare his defense; and (2) the trial court erred in denying the admission of the copy of Garner v. United States into evidence.

Bernhardt maintains that under the circumstances in this case the court abused its discretion in refusing to grant a continuance. The determination of whether a denial of a continuance is arbitrary enough to violate due process depends on "the circumstances present in every case, particularly in the reasons presented to the trial judge at the time the request is denied." Ungar v. Sarafite, 376 U. S. 575, 589 (1964). In United States v. Little, 567 F. 2d 346, 348-49 (8th Cir. 1977), cert. denied, 435 U. S. 969 (1978), this court noted five factors that the trial court must weigh in determining whether to grant a continuance. They are:

(1) the nature of the case and whether the parties have been allowed adequate time for trial preparation;

(2) the diligence of the parties requesting the continuance;

(3) the conduct of the opposing party and whether a lack of cooperation has contributed to the need for a continuance;

(4) the effect of the continuance and whether a delay will seriously disadvantage either party;

(5) the asserted need for the continuance, with weight to be given sudden exigencies and unforeseen circumstances.

The trial court, in refusing to grant the motion for a lengthy continuance, considered the numerous earlier continuances, the conduct of defense counsel in not informing the court of McClellan's situation earlier and the fact that McKindles had entered his appearances as cocounsel. The court apparently felt that the defense had been allowed sufficient time to prepare for trial and that McKindles, as cocounsel, should have been prepared to proceed with the defense. There was no indication that the need for additional time was in any way caused by a lack of cooperation by the prosecution. Furthermore, the court, in detailing the proceedings for the record, seems to suggest a lack of diligence on the part of the defense. The record indicates that the trial court had ample justification for denying the continuance and did not abuse its discretion.

Bernhardt next contends that the trial court erred in refusing to admit into evidence legal references and citations, and in particular a copy of Garner v. United States (no citation given), a court of appeals opinion. The trial court found that under Cooley v. United States [74-2 USTC ¶9718], 501 F. 2d 1249 (9th Cir. 1974), cert. denied, 419 U. S. 1123 (1975), citations and references to legal materials were inadmissible and ordered them deleted from the evidence.

Under the Federal Rules of Evidence the trial court has broad discretion in determining the relevancy and admissibility of evidence. United States v. Peltier, 585 F. 2d 314, 332 (8th Cir. 1978), cert. denied, 440 U. S. 945 (1979); United States v. Briscoe, 574 F. 2d 406, 408 (8th Cir.), cert. denied, 439 U. S. 858 (1978). It is only where the trial court excludes relevant evidence without sufficient justification that a defendant's right to compulsory process is violated. United States v. Peltier, supra, 585 F. 2d at 332. In Cooley v. United States, supra, 501 F. 2d at 1253-54, the Ninth Circuit held that the United States Supreme Court opinions on which defendant claimed to have relied were inadmissible to support his contention that he did not act "willfully." That court noted:

In the orderly trial of a case, the law is given to the jury by the court and not introduced as evidence. It is the function of the jury to determine the facts from the evidence and apply the law as given by the court to the facts as found by them from the evidence. Obviously, it would be most confusing to a jury to have legal material introduced as evidence ad then argued as to what the law is or ought to be.

Bernhardt's argument that showing jurors the opinion on which he allegedly relied would tend to prove his lack of intent would require jurors to reach conclusions regarding the law as stated in the opinion. This would no doubt have resulted in the jury being faced to some extent with legal rather than factual questions. The trial court was warranted in excluding the material under Fed. R. Evid. 403 on the ground that it would tend to confuse the jury.

The judgment of conviction is affimed.