# Opposition Brief — Goldbaum v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0705%3A11 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1955 - **Citation:** 348 U.S. 905 ## Text yy e INDEX Page Opinion below 1 Jurisdiction ] Questions presented 2 Statutes and rule involved é Statement 4 \rgument 10 Conelusion 18 CITATIONS Cases: Anderson v. United States, 30 F. 2d 485 13 Banks v. United States, 204 F. 2d 666, certiorari denied October 19, 1953 Beckman v. United States, 96 F. 2d 15 15 Rell v. United States, 185 F. 2d 302, certiorari denied, 340 U.S. 930 17 Bruno v. United State 308 U.S. 287 15, 18 Bruan v. United States, 175 F. 24 223 1] Corbett v. United States, 89 F. 2d 124 14 Dear Check Quong v. United States, 160 F. 2d 251 17 Epstein v. United States, 174 F. 2d 754 1] Garst v. United States, 180 Fed. 339 12,13 Glasser v. United States, 315 U.S. 60 17 Goldshy v. United States, 160 U.S. 70 15 Giurera v. United States, 40 F. 2d 338 12 Harrison v. United States, 200 Fed, 662 12 Hendrey v. United States, 233 Fed. 5 12 Himmelfarh v. United States, 175 F. 2d 924, eertiorari denied, 338 U.S. 860 14 UcCow v. United States, 169 F. 2d 776, certiorari denied, 335 U. S. 898 12, 14 McLendon vy. United States, 13 F. 2d 777 12 Quercia v. United States, 289 U.S. 466 17 Rossi v. United States, 289 U.S. 89 17 Samuel v. United States, 169 F. 2d 787 14 \chuermann v. United States, 174 F. 2d 397, certiorari de nied, 338 U. S. 831 15 Strickland v. United States, 155 F. 2d 167 ll Stryker v. United States, 95 F. 2d 601 14 Stutz: v. United States, 47 F. 2d 1029 13 Thompson v. United States, 145 F. 2d 826, certiorari de nied, 324 U. S. 861 1] (1) " Cases—Continued Page United States v. Augustine, 189 F. 2d 587 15 United States v. Austin-Bagley Corp., 31 F. 2d 229, cer- tiorari denied, 279 U.S. 863 13, 15 United States v. Becker, 62 F. 2d 1007 13 United States v. Dolasco, 184 F. 2d 746 11,14 United States v. Fenwick, 177 F. 2d 488 11 United States v. Fleischman, 339 U.S. 349 17 United States v. Franke!, 65 F. 2d 285, certiorari denied, 290 U. S. 682 17 United States v. Kemble, 197 F. 2d 316 14 United States v. Spagnuolo, 168 F, 2d 768, certiorari denied, 335 U. 8S. 824 14 United States v. Valenti, 134 F. 2d 362, certiorari denied, 319 U.S. 761 14 Wilson v. United States, 162 U.S. 613 17 Wilson v. United States, 149 U.S. 60 18 Yee Hem v. United States, 268 U. 8. 178 17,18 Statutes: Internal Revenue Code, See. 145 (26 U.S.C. 145) 2 18 U.S.C. 3481 3 Miscellaneous: 89 A.L.R. 1379, Note 13 Branson, Instructions to Juries (3rd ed., 1936) : Sees. 65-66 13 See. 3227 13 Federal Rules of Criminal Procedure, Rule 30 3,15 Randall, Instructions to Juries (1922): Sees. 226-235 13 See. 1983 13 II Wharton, Criminal Evidence (llth ed., 1935), See. 926 1 I Wigmore, Evidence (3rd ed., 1940), Sees. 25-26 15 IX Wigmore, Evidence (3rd ed., 1940), See, 2497 15 nthe Supreme Court of the United States OcroBeR TERM, 1953 No, 414 Austin F. McFEE, PETITIONER Vv, Unirep STaTes OF AMERICA ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT BRIEF FOR THE UNITED STATES IN OPPOSITION OPINION BELOW The opinion of the Court of Appeals (R. 444- 456) is reported at 206 F. 2d 872. JURISDICTION The judgment of the Court of Appeals was en- tered on August 24, 1953. (R. 457.) On Septem- ber 17, 1953, by order of Mr. Justice Clark, the time for filing a petition for a writ of certiorari was extended to October 23, 1953. The petition was filed on October 15, 1953. The jurisdiction of this Court is invoked under 28 U.S.C, 1254(1). See (1) a A APOE NERS Wh sh ah RI aI I OOOO GN. PLUME 2 also Rules 37(b)(2) and 45(a), Federal Rules of Criminal Procedure. QUESTIONS PRESENTED 1. Whether, where the Government’s proof of wilful tax evasion is circumstantial, a court is required to give the jury a specific instruction to acquit the defendant if the proof is not such as to exclude every reasonable hypothesis except that of guilt, over and above the usual instruction on the presumption of innocence and on reasonable doubt. 2. Whether it was error for the trial court to comment, during its instruction to the jury, on the fact that certain primary records were not pro- duced by the defense to contradict the Govern- ment’s prima facie case. STATUTES AND RULE INVOLVED Internal Revenue Code: Sec. 145. Penalties. + * . * * (b) Failure to Collect and Pay Over Taz, or Attempt to Defeat or Evade Tax.—Any per- son 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 BBS PA aR apne ee ar er edette, — ’ =. te Nae ee thereof, be fined not more than $10,000, or im- prisoned for not more than five years, or both, together with the costs of prosecution. * . * He * (26 U.S.C. 145.) Criminal Code: Src. 3481. Competency of Accused. In trial of all persons charged with the com- mission of offenses against the United States and in all proceedings in courts martial and courts of inquiry in any State, District, Pos- session or Territory, the person charged shall, at his own request, be a competent witness. His failure to make such request shall not create any presumption against him. (18 U.S.C, 3481.) Federal Rules of Criminal Procedure: Rule 30. Instructions. At the close of the evidence or at such earlier time during the trial as the court reasonably directs, any party may file written requests that the court instruct the jury on the law as set forth in the requests. At the same time copies of such requests shall be furnished to adverse parties. The court shall inform coun- sel of its proposed action upon the requests prior to their arguments to the jury, but the court shall instruct the jury after the argu- ments are completed. No party may assign as error any portion of the charge or omission 4 therefrom unless he objects thereto before the jury retires to consider its verdict, stating dis- tinetly the matter to which he objects and the grounds of his objection. Opportunity shall be given to make the objection out of the hearing of the jury. STATEMENT On November 8, 1951, a two-count indictment was filed against petitioner in the United States Dis- trict Court for the District of Idaho charging him with violations of Section 145(b) of the Internal Revenue Code. The first count alleged that peti- tioner filed a false income tax return for the year 1945 in which he stated that his net income was $25,166.67 on which the tax was $10,021.05, whereas he knew that his income was $105,077.90 and that the tax was $71,076.35. The second count alleged a false return for the year 1946 in which petitioner claimed a net income of $39,679.01 and a tax of $18,091.55, whereas the figures should have been $115,748.77 and $74,881.45. (R. 3-4.) After a jury trial petitioner was found guilty as charged, and on May 1, 1952, he was sentenced to eighteen months’ imprisonment and a fine of $7,500 on each count. The terms of imprisonment were consecu- tive, but the second term was suspended and he was placed on probation for two years to follow the term of imprisonment on condition that he pay all income taxes due. (R. 32-33.) The Evidence.—During the years involved, peti- tioner derived a major portion of his income from the North Idaho Sales Company, which owned and serviced numerous coin-operated slot machines POOR COPY over a wide territory in Idaho.’ (R. 64-66, 72, 206- 207, 295, 298, 334, 338, 347-348, 351-353, 392.) The amounts collected from these machines by peti- tioner’s route men were recorded on receipts of which two carbon copies were made, One of the carbons was left with the owner of the location at which the machine was being operated ; the original receipt, the other carbon, and the money collected were turned in to a girl employee in the office of the North Idaho Sales Company. The girl checked the cash against the receipts and deposited the cash in the bank. She then turned the receipts and carbons over to petitioner and did not see them thereafter? (RR. 204-209, 296-298, 334-336, 547- 349, 355-359, 360-366, 397-399.) The extent of the slot machine business is apparent from the follow- ing tabulation of gross income derived from that source as shown on the books of the Sales Company (R. 384): 1942 $169,307.89 1943 173,144.48 1944 140,405.95 1945 191,446.83 1946 246,469.77 Petitioner reported all the income actually re- corded in the books of the North Idaho Sales Com- ' He also had income from several taverns, and from rents, dividends and interest. (R. 62-74.) The North Idaho Sales Company, originally a partnership between petitioner and his daughter, was a sole proprietorship during the years involved in this ease, (R. 189-190, 254.) 2 The petition erroneously states (Pet. 8) that only the “third triplicate copy” was turned over to petitioner. (R. 358, 366, 399.) a De a oe a ae he eC ns re | ew pany. (R. 70,76, 167-168.) However, the account- ant who prepared the returns did not audit the books, and he did not examine the receipts of the route men. (R. 77-80.) When internal revenue agents began an investigation of the returns for 1945 and 1946, they discovered that petitioner had spent considerably more than his reported income during those years. He told the agents that the source of these expenditures was a cash fund of $50,000 which he had at the close of 1941, and he promised to produce records and a witness. He pro- duced neither; and the witness, when interviewed by the agents, had no information to give. (R. 237- 240, 259-272.) The slot machine receipts, although requested, were never furnished to the agents. (R. 260, 399.) Under the circumstances the Government used the expenditures method to compute petitioner’s true net income for 1945 and 1946. It was shown that he had expended large sums, in investments, in loans, in attorneys’ fees, and in payment of a Federal District Court fine, which far exceeded his snown resources plus his reported income. (R. 218-241.) The computation revealed that for the year 1945 he had a net taxable income of $105,077.90 of which he had reported only $25,166.67, and that for the year 1946 he had a net income of $110,448.77 and reported only $39,679.01. (R. 241-245.) This result was corroborated by a net worth computa- tion. (R. 245-249.) In order to prove that these 1945-1946 expendi- tures must have been made from current income, 7 and could not have come from some cash fund accumulated during prior years, the Government showed that during 1934 and 1935 petitioner was employed as a butcher and lived very economically (R. 150-154, 200-203) ; that his interest in the slot machine business was very small at that time (R. 200-203) ; and that, on the basis of the income re- ported in his returns and his known expenditures for the period from 1936 through 1944, he could not have acecumulated much more than $20,000 (R. 188-197, 217-218, 273-279). A thorough exami- nation was made to determine all possible assets and sources of income. (R. 237-240, 259-272.) Even if he had, as he claimed, $50,000 in cash at the end of 1941, that sum would have been exhausted by his expenditures during 1943 and 1944 (R. 256), and he would have needed $150,000 in cash at the end of 1944 to account for all the unexplained ex- penditures during 1945 and 1946 (R. 257). Petitioner himself did not take the stand. Some of his witnesses testified that he kept indefinite amounts of eash in safes, which amounts were not recorded in the books. (R. 302-306, 332-333, 394- 397.) Another witness testified that petitioner had assets worth over $100,000 in 1943 which the Gov- ernment had not taken into consideration in its computation. (R. 307-325.) The receipts mace out by the slot machine route men were not intro- duced in evidence. The Instructions —Apparently no written re- * The Court of Appeals deseribed the testimony of this wit- ness as “contradictory and highly questionable”. (R. 450.) a See aad ert wom pao QB ae meme + "aay quest for a specific instruction on the nature of circumstantial evidence was filed at the close of the evidence,’ In his charge to the jury (R. 412-426) the trial judge gave the usual instruction that the ¢ iovern- ment had the burden of proving petitioner guilty beyond a reasonable doubt (R. 415-416). He ex- plained briefly the Government’s expenditure and net worth methods of proof (R. 420-421) and said (R. 420)— This is in the nature of circumstantial evi- dence. Therefore, you should consider whether or not the Government has precluded every reasonable source of these funds except earnings for the years charged. However, the Giovernment is not required to refute all pos- sible speculation * * *, Then, after briefly defining the two types of evi- dence, he said (R, 421)— Circumstantial or indirect evidence, under our law, as well as positive or direct evidence, is competent evidence and is to be given such weight as you determine it is entitled to, The trial judge also warned the jury during the course of the charge that they should not be in- fluenced hy any comment he might have made as to the facts. (R. 425.) A little later, he instructed them that, while the burden of proof never shifted from the Government, they might consider the fail- —_—_—— * Those written requests which actually were filed by the defense (R. 38) have not been included in the record. — — ure of petitioner to offer any explanation of dis- crepancies indicated by the Government’s proof. (R. 417-418.) During this discussion he called attention to the slot machine receipts and said (R. 417)— None of the witnesses, bookkeeper, manager or other witnesses for the defense produced these tickets and all said they had no knowl- edge of these tickets. The tickets were traced to the possession of defendant MeFee. 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 ¢ Just prior to the conclusion of the charge the jury were told that petitioner was not required to prove his innocence, that he was not required to take the stand himself, and that his failure to testify raised no adverse presumption. (R, 422.) The defense objected to the court’s failure 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 hypotheses’, (R. 424.) The defense also objected to the court’s ‘‘eom- mentasto * * * the failure of the defendant to retain the sales slips, or collection slips’. The judge recalled the jury and specifically instructed them that they should not be influenced by this comment. (R, 424.) phate ORE 2-0 10 After the jury had been deliberating for about eight hours, they returned to the courtroom at 8:30 p.m. and the foreman informed the court that they had not yet been able to agree on a verdict. The court asked whether they had any questions and the foreman replied that they would like to hear again the instruction on circumstantial evidence. The court then reread that portion of his original charge in which he had defined the two types of evi- dence and explained the weight to be given cireum- stantial evidence. (R. 425-426.) There was no objection. The record does not reveal how much longer the jury deliberated before it returned with its verdict. ARGUMENT 1. The evidence that petitioner wilfully evaded payment of his income taxes was circumstantial. The trial court instructed the jury on the presump- tion of innocence, reasonable doubt, and the gen- eral nature of circumstantial evidence, but refused to add a formula to the effect that, for cireum- stantial evidence to be sufficient to sustain a verdict of guilty, it must be such as to exclude every hy- pothesis other than that of guilt. Petitioner con- tends (Pet. 10-13) that the Courts of Appeals in some circuits hold that such an instruction is re- quired. In the first place, the original charge actually contained the substance of the desired instruction in language closely keyed to the facts of the pres- ent case. While explaining to the jury the Govern- _— ment’s use of the expenditure and net worth meth- ods to prove unreported income, the one critical issue in the case, the court said (R. 420) : 11 This is in the nature of circumstantial evi- dence. Therefore, you should consider whether or not the Government has precluded every reasonable source of these funds except earnings for the years charged. However, the (Government is not required to refute all pos- sible speculation * * *. [Emphasis sup- plied. ] The Court of Appeals correctly said (R. 454) that the instruction given stated the law ‘‘with much more clarity and foree’’ than the abstract ob- jection made by petitioner at the close of the charge (supra, p. 9). Furthermore, there is no present conflict of deci- sions calling for a review by this Court. Many of the cases cited in the petition are not in point, for they deal, not with instructions to the jury, but with the quantum of circumstantial evidence re- quired to take the case to the jury or to sustain the verdict.” Obviously, the various formulae used by appellate courts in defining and redefining this concept need not necessarily be used in instructing the jury. In pointing out this distinction, the * In this class are Bryan v. United States, 175 F. 2d 223, 226 (CA. 5th): Strickland v. United States, 155 F. 2d 167, 168 (C.A. 5th); Thompson v. United States, 145 F. 2d 826 (C.A. Sth), certiorari denied, 324 U.S. 861; Epstein v. United States, 174 F. 2d 754, 769 (C.A. 6th); United States v. Fenwick, 177 F. 2d 488, 490 (CA. 7th); ef. United States v. Dolasco, 184 F. 2d 746, 748 (C.A. 3d). —_—__ EE eE .__a_aqQ SS 12 Court of Appeals for the Ninth Circuit said in an- other recent case ( McCoy v. United States, 169 F. 2d 776, 786, certiorari denied, 335 U. 8. 898) : Of course, the jury’s conclusion must have support in the evidence to the effect that there is no hypothesis determinable from the proof under which the verdict of guilt could reasonably be avoided, but this is not saying that any technical form of instruction need be given. A different formula from that requested by peti- tioner, namely, that the jury should acquit if the circumstances are as consistent with innocence as with guilt, has been discussed in several cases. In the old case of Garst v. United States, 180 Fed. 339, 343, never since cited with approval, the Fourth Circuit held that such an instruction should be given. w? Davin L. Luce, | <*% . JosepH M. Howarp, Special Assistants lo the Attorney General. NoveMBER, 1953 Tou S GOVERNMENT PRINTING OFFICE 1953 278058 se --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0705%3A11. Public record. Not legal advice.