Brief for the Respondents in Opposition — Gould v. United States

INDEX

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CITATIONS

Cases:

C. 1. T. Corporation v. United States, 150 F. 2d 85....._ 9

Cornes v. United States, 119 F. 2d 127............ 13

Egan v. United States, 137 F. 2d 369, certiorari denied,

Bee Be Wi. Wiiatncdnkconnnabenbhidmahnisinndtiicn akan 9

Ewing v. v Inited States, 135 F. 2d 633, certiorari denied,

SLE Seedndend apanibuinknn Sivkiaatibinaindbioeios 0 12

Glasser v. ‘t Inited States, 315 U. 8. 60. ....... 12

Goldsby v. United States, 160 U.S. 70... 13

Hoffman v. United States, 68 F. 2d 101_....---- 13

Mininsohn v. United States, 101 F. 24 477_..... 9

Morris v. United States, 123 F. 24 957__.......... 12

New York Central Railroad vy. United States, 212 U. S. 481. 9

Old Monastery Company v. United States, 147 F. 2d 905,

certiorari denied, October 8, 1945, No. 229 this Term... 10

Powers v. United States, 223 U.S. 303.............. 12

oict sprthitewo. %, J | SOSietpaip eee e seme eee 7

Strom +e United States, 12 F. 2d 233, certiorari denied, 271

th aba a icnieinhumn ced Dipti athe ad inmencie senie de 12

United Cigar Whelan Stores Corporation v. United States,

Sa eesti dednchbanddnbsbankodbeddanscun'es 12

United States v. Harrison, 121 F. 2d 930, certiorari denied,

IM DLL diate bein biden iednwimined.c. uc, 12

United States vy. — 126 F. 2d 151, certiorari de-

ESTERS Pelee te, Sane 13

United States v. ra 123 F. 2d 604, certiorari denied,

REE ASS IG oe Pe Oy eee 12

Statutes:

The Emergency oe Control Act of 1942, 56 Stat. 23,

as amended, 50 U.S. C. App., Supp. IV, 901 et seg.:

i eetiieclitnnt midi athena andithintmuimetdnsbilawiais conn. 3

ERMC A ES RRR CR Se ee age 3,7

RE A ne yah ae ey ae ee 3

Miscellaneous:

3 Wigmore, Evidence, 3d ed., sec. 1003_......... 12

692167—46 a)

SSI ER AE NNN LE I TE PO -

Inthe Supreme Court of the Wuited States

October Term, 1945

No. 1102

Rosert GouLp AND Dow.xina Bros. DIsTILLING

ComMPANY, A Kentucky CORPORATION, PETI-

TIONERS

v.

Unirep States or AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES CIRCUIT COURT OF APPEALS FOR THE SIXTH

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the circuit court of appeals (R.

936-948) is reported at 153 F. 2d 353.

JURISDICTION

The judgment of the circuit court of appeals

was entered February 8, 1946 (R. 935), and peti-

tions for rehearing were denied March 11, 1946

(R. 1011)." The petition for a writ of certiorari

‘The petitions for rehearing were apparently denied be-

fore the judges who heard the appeal received a supplemental

petition (see R. 1011). On April 18, 1946, after the petition

for a writ of certiorari had been filed in this Court, the cir-

cuit court of appeals denied the supplemental petition. We

are informed by counsel for petitioners that a copy of this

order has been sent to the Court.

(1)

EE NG UI TN LEE EEE PE DE MA EDISON eye

a

2

was filed April 12, 1946. The jurisdiction of this

Court is invoked under Section 240 (a) of the

Judicial Code, as amended by the Act of Febru-

ary 13, 1925.’

QUESTIONS PRESENTED

1. Whether the counts of an indictment charg-

ing sales and deliveries of liquor at above ceiling

prices, each based on a separate invoice from

buyer to seller, charged separate offenses.

2. Whether the petitioner corporation was

properly found to be criminally liable for sales

effected by its principal stockholder who was in

active control of the corporation and in complete

charge of sales.

3. Whether evidence of sales to persons not

charged in the indictment in a manner similar

to that proved as to those charged in the indict-

ment was properly admitted in rebuttal as bear-

ing on the credibility of petitioner Robert Gould

after he had denied making such sales.

* The petition was filed within 30 days, exclusive of Sun-

days and holidays, from the date of the order of the circuit

court of appeals denying rehearing, as allowed by Rules XI

and XIII of the Criminal Appeals Rules promulgated by this

Court May 7, 1934, but more than 30 calendar days after the

order, as allowed by Rules 37 (b) (2) and 45 (a) of the new

Rules of Criminal Procedure, effective March 21, 1946.

Since the petition seeks review of a judgment entered prior

to the effective date of the new rules, we do not contest its.

timeliness. See Rule 59 of the Rules of Criminal Procedure,

providing that, “so far as just and practicable,” the rules

govern all criminal proceedings which were pending on their

effective date.

: 3

STATUTE INVOLVED

The Emergency Price Control Act of 1942, 56

Stat. 23, as amended, 50 U. S. ©. App., Supp.

IV, 901 et seqg., provides in pertinent part:

Sec. 2. (a) Whenever in the judgment of

the Price Administrator * * * the

price or prices of a commodity or com-

modities have risen or threaten to rise to

an extent or in a manner inconsistent with

the purposes of this Act, he may by regu-

lation or order establish such maximum

price or maximum prices as in his judg-

ment will be generally fair and equitable

and will effectuate the purposes of this

BRAT EES

Sec. 4. (a) It shall be unlawful * * *

for any person to sell or deliver any com-

modity, * * * in violation of any reg-

ulation or order under section 2 * * *,

Sec. 205. * * * (b) Any person who

willfully violates any provision of section 4

of this Act * * * shall, upon convic-

tion thereof, be subject to a fine of not

more than $5,000, or to imprisonment for

not more than two years in the case of a

violation of section 4 (¢) and for not more

than one year in all other cases, or to both

such fine and imprisonment. * * *,

STATEMENT

An indictment in 48 counts was returned

against petitioners in the United States District

“Court for the Eastern District of Kentucky, each

count charging the sale and delivery of a specified

~

See:

4

quantity of liquor on a specified date between

June 26 and December 2, 1943, at prices in excess

of the maxima fixed by O. P. A. regulations

(R. 2-137). Counts 1 to 21, inclusive, were based

on sales to Josselson Bros. Inc. (R. 2-59), and

counts 22 to 48 on sales to E. J. Baumer, doing

business as B. & B. Liquor Wholesalers (R. 59-137).

Alex Josselson and E, J. Baumer were wit-

nesses for the Government (R. 202, 374). Each

of them testified that petitioner Robert Gould

agreed to sell him liquor at fixed prices above

ceiling, the amount of the excess charge varying

according to the grade and quantity of the liquor

(R. 202-295, 208, 269, 376-378). As each of

these witnesses was on the stand, the invoice upon

which each count of the indictment was based

was introduced in evidence, and the witness

testified that he had received the liquor covered

by the invoice, had paid the invoice (ceiling)

price by check to the Dowling Company, and had

paid an additional specified amount in cash to

Robert Gould personally (R. 208-244, 379-399).

In all, Josselson paid approximately $280,000

above ceiling and Baumer over $200,000.

* Baumer was directly corroborated by one of his salesmen,

who testified that on some occasions he delivered cash to

Robert Gould (R.509,511-512). Josselson was corroborated

to the extent that his bookkeeper testified that Josselson di-

rected him to keep packages of currency in the safety deposit

vault and to take out the money before Josselson’s trips to

Cincinnati (cf. R. 248 with R. 326-327, 343), where peti-

5

Robert Gould was chairman of the board of

directors and majority stockholder of the Dowling

Company (R. 372, 649-650). The only other sub-

stantial stockholder was his brother Alvin

(R. 372-373, 653), whom Robert characterized

as a partner (R. 569), and who, during the period

covered by the indictment, was on active duty

in the United States Coast Guard (R. 761). With

Alvin Gould’s knowledge and consent, Robert

Gould was directing head of the company (R.

761-762). Robert was in complete charge of

sales (R. 354, 651).

In submitting the case to the jury, the judge

charged that ‘‘the corporation here can be guilty

only if you believe that there were violations of

these maximum ceiling prices by its officers and

agents and stockholders with the consent of the

corporation. A corporation can only give its con-

sent through its stockholders, officers and agents’’

(R. 912). He then stated that there was no dis-

pute that Robert and Alvin Gould owned all but

20 shares of the stock of the corporation, and

further charged the jury that ‘if you believe that

this corporation, acting through its agents, man-

aging agents, officers and stockholders, with their

consent, violated this law as charged in this in-

tioner Gould maintained his office (R. 352, 649-651).

Baumer also testified that he paid Gould with bills of large

denominations (F.. 378) and there was testimony by various

bank tellers that on a number of occasions Gould exchanged

large bills for smaller ones (R. 529-530, 533-534, 536-537).

SPRITE POE EE ERR EER URE ORE EC RE OO OR a

——

6

dictment, and if you believe that as I shall in-

struct you beyond a reasonable doubt, then, the

corporation is liable’’ (R. 912).

' he jury returned a verdict of guilty on all

counts against both Robert Gould and the corpo-

ration (R. 924). Gould was sentenced to im-

prisonment for a total of six years, one year on

each count of the indictment, the first six sen-

tences to run consecutively and the others to run

concurrently with the first six and with each

other. He was also fined $5,000 on each count,

making a total fine of $240,000. The corporation

was also fined $240,000, $5,000 on each count.

(R. 925.) On appeal, the judgments were

affirmed (R. 935).

ARGUMENT

Petitioners contend (Pet. 2, 3, 6, 9, 10-15) that

a number of counts of the indictment are based

on the same transaction and do not charge sepa-

rate offenses. The point was first raised by a

supplement to the petitions for rehearing filed in

the circuit court of appeals on March 7, 1946

(R. 995-1008), more than a week after the origi-

nal petitions for rehearing had been filed (R. 951-

992). The circuit court of appeals denied the

petitions for rehearing on March 11, 1942

(R. 1011), apparently before the supplement to

the petitions had been received by the judges who

heard the appeal (see R. 1011). On April 13,

1946, after the petition for a writ of certiorari

a

EEE EEA STS Ee EP A, BS PE AO Ee AEST IS PI aS ITI Ey MERE SS <a

7

had been filed in this Court, the circuit court of

appeals entered a per curiam order denying the

supplement to the petition, in which it pointed out

that even if petitioners’ contention in this respect

were sound, there would nevertheless be a suf-

ficient number of valid counts to support the term

of imprisonment imposed against Robert Gould.

It declined to express any view on the belated

challenge to the validity of the fines, stating that

a defendant may move in the convicting court for

correction of an invalid sentence.

We assume that, as petitioners argue (Pet.

14-15), the question is one which may be raised at

this point, despite the tardiness of the objection

below. The contention is, however, clearly with-

out substance. Each count of the indictment was

based on a separate invoice from the Dowling

company to the purchaser, and when a particular

invoice included different quantities and brands

of liquor the transaction was nevertheless charged

as one offense (see count 4, R. 10-12; count 5,

R. 12-15; count 6, R. 15-18; count 10, R. 26-29;

count 36, R. 99-102). All the invoices except

those forming the basis of the first two counts

bear different dates, showing clearly that they rep-

resented separate deliveries of liquor. Since

delivery is itself an offense under the Emergency

Price Control Act (see Section 4 (a), supra, p. 3;

Schreffler v. Bowles, 153 F. 2d 1 (C. C. A. 10)),

counts 3 to 48, inclusive, on their face charge sep-

arate offenses which were established as such by

8

the evidence consisting of the separate invoices.

Petitioners’ contention that certain groups of

these counts are based on single transactions is

predicated upon the fact that such counts specify

that the respective agreements to sell were made

on the same date (Pet. 11-12). However, each

count specified the date of the invoice as the date

of the offense charged therein. Nor does the fact

that the purchaser paid for two separate invoices

by one check (R. 386-390) establish, as petitioners

claim (Pet. 12), that such invoices represent one

transaction.

The separate invoices upon which counts 1 and

2 were based bear the same date, but one was for

whiskey and the other for rum (R. 2-7). Even

as to these counts, the indications are that the in-

voices represented separate shipments since, in an-

other instance, rum and whiskey were covered by

one invoice (count 4, R. 10-12). In any event,

rum and whiskey are two separate items subject

to two different ceiling prices which had to be

separately calculated (see R. 456). Hence, even

assuming that delivery was made at the same time

under both invoices, we think it is clear that the

sale of each of these separate articles constitutes

a separate offense.

2. On behalf of the corporation it is contended

(Pet. 2, 7, 15-20) that the indictment does not

allege, and the evidence does not establish, facts

upon which to predicate corporate responsibility.

9

The indictment alleged in each count that the

corporation and Robert Gould, who was ‘‘a prin-

cipal stockholder and director,’’ unlawfully sold

and delivered and aided and abetted each other

in so selling and delivering liquor at above ceiling

prices. Manifestly, therefore, the indictment di-

| rectly alleged illegal corporate action.

The proof established that the only substantial

stockholders of the corporation were Robert

Gould and his brother Alvin, and that Robert,

with Alvin’s knowledge and consent, was in active

control of the corporation and in complete charge

of sales during Alvin’s absence on military duty

(see supra, p. 5). Dowling, the president of the

corporation, testified that he was in charge of the

distilling process and had no authority to make

sales (R. 349-354). The only person who could

act for the corporation in making the sales in

question was, therefore, Robert Gould. The liq-

vor sold was owned by the corporation and the

sales were invoiced in its name. Since it is well

established that a corporation is criminally re-

sponsible for the acts of its agent committed in

the scope of the agent’s authority,’ we think it is

clear that the corporation was properly held liable

for the sale of corporate owned liquor sold by

*New York Central Railroad v. United States, 212 U. S.

481; C. 7. T. Corporation v. United States, 150 F. 2d 85, 89-90

(C. C. A. 9); Egan v. United States, 137 F. 2d 369, 379

(C. C. A. 8), certiorari denied, 320 U. S. 788; Mininsohn v.

United States, 101 F. 2d 477-478 (C. C. A. 3).

—_— te Rat Nee

an

10

the only agent of the corporation who could make

sales.

In instructing the jury as to corporate respon-

sibility, the judge laid down a stricter test than

that set forth in the cases cited (supra, fn. 4);

he charged that there must have been consent

by the corporation (supra, p. 5). He then sum-

marized the undisputed facts from which such

consent might be found. Since the charge in this

respect was more favorable to the petitioning

corporation than was required, the objection to

the charge (Pet. 20) is without merit.

Under the facts of this case, Robert Gould,

who made the sales, was also the person who, with

the knowledge and consent of all stockholders,

was in active control of the corporation as a

whole. In practical effect, he was the only person

who was in a position to give consent on behalf

of the corporation. The jury was thus justified in

finding the corporation liable under the judge’s

charge on the basis of its consent to the acts in

question. There is no proof that payment to

Gould, the responsible officer of the corporation,

was not payment to the corporation. But, in

any event, benefit is not the ‘‘touchstone of cor-

porate criminal liability; benefit, at best, is an

evidential, not an operative, fact.”” Old M onastery

Company v. United States, 147 F. 2d 905, 908

(C. C. A. 4), certiorari denied, October 8, 1945,

No. 229 this Term.

11

3. When Robert Gould took the stand in his

own behalf, he testified that the Dowling company

had made sales to Josselson and Baumer at the

invoice prices and that he had not received, di-

rectly or indirectly, any payments above those

prices (R. 612). On cross-examination, he was

asked whether he had not, during the period

covered by the indictment, received cash

premiums above ceiling prices from persons not

named in the indictment, and he denied receiving

such payments (R. 661-667, 676-677). Peti-

tioners’ objections to this line of cross-exami-

nation were overruled (R. 664, 665, 676, 677). In

rebuttal, the Government called as witnesses the

persons about whom Gould had been questioned

and, over objections by defense counsel (R. 868-

885), these witnesses were allowed to testify that

they had made cash payments in excess of ceiling

prices to Gould (R. 885-886, 889-891, 892-893,

894-895).° In each instance the judge instructed

the jury that the evidence should be considered,

if at all, only as bearing on the credibility of

Robert Gould (R. 888, 891, 893, 895-896).

Petitioners argue (Pet. 3, 7, 20, 23) that the

admission of this evidence in rebuttal constituted

reversible error on the ground that it was offered

* During the course of the discussion of petitioners’ objec-

tions, it appeared that the trial judge first thought that Gould

had testified on direct that he had never made any sales above

ceiling (R. 872), but before the judge made his final ruling,

he admitted that Gould had not made such a general state-

ment (R. 884).

12

in contradiction of a collateral issue. However,

as petitioners’ counsel himself admitted during

the course of the argument on the admissibility

of such testimony (R. 869, 873, 879, 881), the

evidence could properly have been offered in the

Government’s case in chief as bearing on the

willfulness of petitioners’ conduct and the scheme

by which they operated. Morris v. United States,

123 F. 2d 957 (C. C. A. 5); United Cigar Whelan

Stores Corporation v. United States, 113 F. 2d

340, 347 (C. C. A. 9); see Glasser v. United States,

315 U. S. 60, 81. The evidence was therefore not

collateral as that term is used in defining the

limits by which a eross-examiner is bound by the

negative answers given by a witness. The rule

is that facts which could have been independently

offered for another purpose may be offered in

contradict‘on of a witness. 3 Wigmore, L£vi-

dence, 3d ed., sec. 1003. It was, therefore, proper

for the Government to cross-examine Gould as to

these matters, both on the issue of his intent, and

as affecting his credibility,® and to offer evidence

to rebut his negative answers. Strom v. United

States, 12 F. 2d 233, 234 (C. C. A. 6), certiorari

denied, 271 U. S. 683; see Ewing v. United States,

135 F. 2d 633, 640-641 (App. D. C.), certiorari

denied, 318 U. 8. 776.

* Powers v. United States, 223 U. S. 303, 315, 316; United

States v. Skidmore, 123 F. 2d 604 (C. C. A. 7), certiorari

denied, 315 U. S. 800; United States v. Harrison, 121 F. 2d

930, 934 (C. C. A. 3), certiorari denied, 314 U. S. 661.

ea ie oe aVTye ¢ PE Sas PERL c ME VIN OK —

13

In essence, petitioners’ contention amounts to

no more than that evidence which could have been

admitted in chief was allowed in rebuttal. It is

well established that this does not constitute

grounds for reversal. Goldsby v. United States,

160 U. 8. 70, 74; United States v. Montgomery,

126 F. 2d 151 (C. C. A. 3), certiorari denied, 316

U.S. 681; Cornes v. United States, 119 F, 2d 127,

130 (C. C. A. 9); Hoffman v. United States, 68

F, 2d 101, 103 (C. C. A. 10). Petitioners in par-

ticular have no cause for complaint, since the

evidence as finally admitted was given more lim-

ited application than it would have had if offered

in chief.

CONCLUSION

\ The decision below is correct and the case pre-

sents no conflict of decisions or question of general

importance. It is therefore respectfully sub-

mitted that the petition for a writ of certiorari

should be denied.

J. Howarp McGrarn,

Solicitor General.

Tueron L. Caup.r,

Assistant Attorney General.

Rosert 8. Erpanz,

Beatrice ROSENBERG,

Attorneys.

May 1946.

VU & COVERS MENT PRINTING OFFICE, tae