Petitioner for ReHearing — Rosenblum v. United States

PLEGCOPY | 7*="=

DEC 20 1949

—.

ine UNG

IN THE Be 2S

Supreme Court of the United States

Ocroser TERM, 1949

Nos. 368, 369, 370

LOUIS H. ROSENBLUM,

Petitioner, Appellant Below,

vs.

UNITED STATES OF AMERICA,

Respondent, Appellee Below.

MAX STRYK,

Petitioner, Appellant Below,

vs.

UNITED STATES OF AMERICA,

Respondent, Appellee Below.

JACOB WEISS,

Petitioner, Appellant Below,

vs.

UNITED STATES OF AMERICA,

Respondent, Appellee Below.

SEPARATE AND SEVERAL PETITION

FOR REHEARING

ALBERT Wann,

Patmer K. Warp,

318 Insurance Bldg.,

Indianapolis, Ind.,

Wuu1um B. Harretz,

Republic Bank Bldg.,

Dallas, Texas,

Counsel for Petitioners.

Central Publishing Company, Indianapolis, Ind.

INDEX

Separate and Several

kn os ines ae ka bas eaes noe se ens

Intervening Circumstances ....................

Address’of Mr. Chief Justice Vinson ...........

EE SS, ok cana uch bee aso eke Cus k ex’

REESE ree mn

pO Ee eee ee eee er er

os nk aa en chp eed eae Ne abot

SS SERS aT EG SET oom Re, Nay A npg ao Cr

Certificate of Counsel pursuant to Rule 33(2)

LIST OF AUTHORITIES

Page

BE SI Bs Pe he ncn dc aipecisecesesss 12

Barcott v. United States, 169 F. 2d 929 (9 C. A.) Cert.

den. February 14, 1949, 60 S. Ct. 602 ............ 8,9

Bryan v. United States, 175 F. 2d 223 (5 C. A.) Certiorari

granted October 10, 1949 ............0cceceees 14, 15

Butler v. United States, 20 F. 2d 570 (8 C. A.) ......... 12

Dodge v. United States, 258 Fed. 300, 305 (2 C. A.) ..... 12

Edgerton v. United States, 143 F. 2d 697 (9 C. A.) ..... 12

Fiswick v. United States, 329 U.S. 211 ............. 4, 16

Gentry v. Billing, 73 F. 2d 925 (9 C. A.) ............ 5

Gleckman v. United States, 80 F. 2d 394, 395-399

(fey eo) 2 Og eee ree 8, 14

Jones v. United States, 164 F. 2d 398, 400 (5 C. A.) ... 14,15

Kotteakos v. United States, 328 U.S. 750 ........... 4,16

Krulewitch v. United States, 336 U.S. 440 ............ 16

Lange v. United States, 161 F. 2d 699 (7 C. A.) ........ 8

Lustig v. United States, 163 F. 2d 85 (2 C. A.) Cert. den.

ek | Ba SR SPR yer Te re eer eee 8

Locke v. United States, 166 F’. 2d 449 (5 C. A.) Cert. den.

as EE ac KEG AER C4 FECES whe 6bNORKEA CRS KK Se 8

Maxfield v. United States, 152 F. 2d 593 (9 C. A.) Cert.

See Sie SE hp dn sk deans ebaséchpecoccnes tes 8

McCandless et ux v. United States, 298 U.S. 342 ....... 5

Pinkerton v. United States, 328 U.S. 640 ............ 15

Rose v. United States, 128 F. 2d 622 (10 C. A.)

ii

_—

LIST OF AUTHORITIES—Continued

Page

Sabourin v. United States, 157 F. 2d 820 (2 C. A.) Cert.

EE ai cin ween heed oases ibs uve ces 8

Singer v. United States, 58 F. 2d 74 (3 C. A.) ........ 8,9

United States v. Atkinson, 297 U. S. 157 ............. 5

United States v. Berman, 75 F. Supp. 789 (D. C., N. D.

DE RSC SGRNCRE CAT RAL EE ESN Or cab saw bade 8

United States v. Chapman, 168 F. 2d 997 (7 C. A.) .... 8

United States v. Farrington, 11 F. Supp. 215 (D. C., M.

ES re che ekh yeas cnanad chmod excess 8, 10

United States v. Fenwick (7 C. A. No. 9895, decided

Nov. 4, 1949) set out in full as an appendix to peti-

tioners’ reply brief heretofore filed in this Docket .. 14

United States v. Molasky, 118 F. 2d 128, 131 (7 C. A.) .. 10

United States v. Yoffe, 52 F. Supp. 175 (D. C., D.

ED pada A Veen toa uns kam On eaN kk aehce cade cbs

oe ee oe oh om

CONSTITUTION OF THE UNITED STATES

Pages

Sixth Amendment to the Constitution ............. 10, 11

STATUTES

Section 51(a) Internal Revenue Code (Title 26, United

I OCT Cee Tee ere Pere 7

Section 115(a) Internal Revenue Code (Title 26,

a Per rae Terre eee

Section 145(b) Internal Revenue Code (Title 26,

United States Goede) ...iscsseccccccss 7, 10, 11, 12, 13

REGULATIONS

United States Department of the Treasury, Bureau of

Internal Revenue Regulations 111, Section 29.51-

gk Baar Pree rrr PPE reer ere 7

RULES OF COURT

Rule 2, Title I, General Rules of the Court of Appeals

SED TP IIE ho nv kb Siac Seawiacescdins 2

Rule 7(c)—Federal Rules of Criminal Procedure... 12

Rule 8—Federal Rules of Criminal Procedure ...... 17

Rule 13—Federal Rules of Criminal Procedure ..... 17

Rule 33(2)—Rules of the Supreme Court ........... 21

Rule 38—Rules of the Supreme Court .............. 6

REPORTERS

Supreme Court Reporter—Advance Sheet, Nov. 15, 1949.

iv

IN THE

Supreme Court of the United States

Octoser TreRM, 1949

Nos. 368, 369, 370

LOUIS H. ROSENBLUM,

Petitioner, Appellant Below,

vs.

UNITED STATES OF AMERICA,

Respondent, Appeliee Below.

MAX STRYK,

Petitioner, Appellant Below,

vs.

UNITED STATES OF AMERICA,

Respondent, Appellee Below.

JACOB WEISS,

Petitioner, Appellant Below,

vs.

UNITED STATES OF AMERICA,

Respondent, Appellee Below.

SEPARATE AND SEVERAL PETITION

FOR REHEARING

Louis H. Rosenblum, Max Stryk and Jacob Weiss, each

petitions for a rehearing upon his separate and several

petition for a writ of certiorari, denial of which was made

by this Court on December 5, 1949.

1

FEI NE EOI tI ECLA LS AS TEE IGS AEP ARS

— ee

2

INTERVENING CIRCUMSTANCES

Since the preparation of said petitions for certiorari,

the judgment of the United States Court of Appeals for

the Seventh Circuit of June 13, 1949, which reversed the

conviction of petitioners on the conspiracy indictment, has

become final; the October 1948 term in which such judg-

ment was rendered expired on October 2, 1949. (Rule 2,

Title I, General Rules of the Court of Appeals for the Sev-

enth Circuit.) The motion of the Government for rehear-

ing was overruled by the Court of Appeals on August 24,

1949. No further application was made by either of the

parties to reverse, or review such judgment.

Said judgment of the Court of Appeals now controls the

rights of the parties herein; it has become the law of the

case as to all matters therein properly decided, and such

decision is now binding upon this Court.

Such judgment determines that:

(aj® The substantive indictments, and the con-

spiracy indictments were tried below (R. 398), and

all of the convictions on all of the charges (including

those sought to be reviewed by this Court) rest, on

the theory, finding and conclusion that the defendants

were engaged in the same joint enterprise. (R. 399,

400.)

(b) Under the peculiar circumstances of these

cases, the trial on ii. conspiracy charge embodied the

same crime as that based on the substantive charges.

(R. 399, 400.)

(ec) The trial court failed to differentiate between

the proof relative to the substantive offenses and that

relative to the conspiracy charge. (R. 399-402.)

(d) The proceedings in the trial court, including

the erroneous admission of testimony, were so preju-

x

ra UR GR AS ———

3

dicial to the substantial rights of each petitioner that

it was necessary to reverse the conspiracy conviction.

Having conclusively shown by the final judgment of the

Court of Appeals that it was an abuse of judicial process

to have returned the conspiracy charge, and that the trial

court failed to differentiate between the proof relevant to

the different charges (R. 398-402), petitioners very re-

spectfully urge that they have shown by the record that

they suffered substantial prejudice and in the trial there

was a clear departure from the constitutional norm which

guarantees them a fair and impartial trial.

The trial on different indictments for the same offense,

at the same time, is shown by the record to have greatly

aggravated the prejudicial effect upon their substantial

rights; the legality of the conspiracy indictment was

sustained upon the theory that it contained a sufficient

charge of an offense separate from that charged in the

substantive indictments (R. 401); the joint trial was had

upon the theory that the statements of the different de-

fendants which were admitted in evidence, and which

were regarded as additional reasons for reversing the con-

spiracy charge, were admitted in the trial court, except

as to the individual making such statements, against him

solely and without prejudice to the others until and un-

less by proper evidence, a conspiracy is shown (R. 95);

this resulted in getting incompetent prejudicial evidence

in the record which the trial court could not and did not

properly apply to the several charges. (R. 400-402.)

It was necessary to go to the Court of Appeals to find

the true theory upon which the trials below were actually

had, and its final judgment now establishes that netitioners

were tried on the separate indictments (conspiracy and

substantive) for one and the same offense:—that of having

ae oe hey

_— nen

4

engaged as participants in a joint enterprise designed to

attempt to defeat and evade the payment of income taxes

(R. 399, 400), as outlined in the conspiracy charge.

The conviction of conspiracy was reversed because,

among other reasons, the trial court failed to differentiate

between the proof relevant to the different charges. (R.

399.)

Petitioners thus bring into this Court a Record which

goes one step further than Fiswick v. United States, 329

U.S. 211, where this Court was required to determine from

the Record whether the error complained of wrongfully in-

fluenced the jury in arriving at its verdict.

In the instant cases no room for doubt exists; the final

judgment of the Court of Appeals shows conclusively and

determines judicially that the error was of such substance

that it wrongfully influenced the trial court in arriving at

its judgment. (R. 399.)

Nothing can be more vital or substantial in the enforce-

ment of the criminal law than the right of the accused to

be tried by a tribunal that can and does differentiate be-

tween the proof that is relevant to the respective charges

made against him.

Nor is it fair and just that petitioners should be sent to

the penitentiary for three years and each made to pay a

fine of $10,000.00, plus court costs, upon a Record in which

it is judicially established by the Court of Appeals—that

the trier of their causes failed to distinguish between

admissible and inadmissible evidence as to the proof rela-

tive to the crime charged against them.

In Kotteakos v. United States, 328 U. S. 750, where the

record showed substantial prejudice, this Court said:

‘*The inquiry cannot be merely whether there was enough

spins

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PRETO PROG ILS NE PO OR LE eT PMD Mee ote ws nae a So

—

to support the result, apart from the phase affected by

the error. It is rather, even so, whether the error itself

had substantial influence. If so, or if one is left in grave

doubt, the conviction cannot stand.’

5

The true situation in our cases is that, as a result of the

wrongful consolidation of the different indictments, the

Record became so confusing to the trial court that it could

not and did not give the petitioners a fair trial. No trial

is fair where the trier of the facts fails to differentiate

properly as to the proof applicable to the charges upon

which the accused is being tried; the unfairness of the

instant trial is now judicially established by the judgment

of the Court of Appeals; it becomes more acute and of

greater prejudice when the reviewing court reverses only

as to a part of the unfair result, and affirms as to the

other, though equally contaminated.

These causes were so intermingled that the reversal of

one necessitated reversal of the other.

Gentry v. Billing, 73 F. (2d) 925 (9 C. A.).

The error is clearly one which relates to the substantial

rights of petitioners, and is obviously so prejudicial as

seriously to ‘‘affect the fairness, integrity and public repu-

tation of judicial proceedings’’; and under such situation

the writ prayed for should be granted.

United States v. Atkinson, 297 U. S. 157;

McCandless et ux v. United States, 298 U. S. 342.

PE LEEP ASLAN NETTIE LER LER ENR AT SI SE RE AE IR SED

ScEEnEEEEEEEE

ADDRESS OF MR. CHIEF JUSTICE

VINSON

For the purpose of urging this petition, petitioners re-

gard the address of Mr. Chief Justice Vinson, before the

American Bar Association on September 7, 1949, as an

intervening circumstance of substantial and controlling

effect; the context of which was not brought to their at-

tention until they read the weekly advance sheet of the

Supreme Court Reporter of November 15, 1949.

This address is certainly a succinct and essential clarifi-

cation of Rule 38 of this Court, and of value to petitioners

in the presentation of substantial grounds available to them

for the granting of their writ, although not previously

presented in their petition.

We understand therefrom that the Court is especially

interested in the actual, practical effect of the disputed de-

cision—its consequences for other litigants and in other

situations, and that petitioners should show why it is

vital that the questions involved be decided finally by this

Court.

With this additional information as to the real purpose

of a petition for certiorari, we will present substantial

grounds for the granting of the writ, not previously pre-

sented in the petition.

AS TO QUESTION ONE

Congress has provided that the taxpayer shall file a re-

turn setting forth to such extent, and in such detail, as the

Commissioner with the approval of the Secretary may by

regulations prescribe, the items of gross income and the

—

deductions and credits allowed pursuant to the income

tax Chapter. Section 51 (a) of the Internal Revenue Code

(Title 26, United States Code). Treasury, Bureau of In-

ternal Revenue, Regulations 111, Section 29.51-1-2-4 and 5

prescribe ‘‘Form 1040’’ as the Income Tax Return form,

which further requires that ‘‘Gross Income’’ be broken

down and made to include the items of:

7

“1. Salaries,’’ ‘‘2. Dividends,’’ ‘‘3. Interest on corpora-

tion bonds,’’ ‘4. Interest on Government obligations, ’’

‘5, Annuities,’’ ‘‘6. Net gain (or loss) from sale or ex-

change of property,’’ ‘‘7. Rents and Royalties,’ ‘‘8. Net

profit (or loss) from business or profession,’’ ‘‘9. Income

(or loss) from partnerships; fiduciary income; and other

income. ’’

All of such information is deemed material and must be

supplied by the taxpayer in his tax return.

It is just as vital and material to the taxpayer, when in-

dicted, to know what item of his return is claimed to be

false, as it is to the Treasury to know the items which

make up the total of his gross income.

Petitioners assert that as a concomitant part of the tax-

ing plan created by Congress, which requires the tax-

payer to itemize and break down his gross income, it is

just as vital and material that the Government be required,

in a prosecution under Section 145 (b), to set out in the

indictments the particular item or items listed in the return

as filed by the taxpayer which are claimed to be false.

The indictment returned against each petitioner con-

tains facts required by Congress in income tax cases where

unlawful evasions under Section 145 (b), Title 26, United

States Code, are involved, and no part of such indictments

can be treated as surplusage.

monientien SEE

8

This has been regarded as the law for many years, and

it has been the practice of the Department of Justice, in

its indictments for unlawful evasions, to follow the form

of setting out the items contained in the break-down of

the income as listed in the taxpayer’s return, and then

descriptively to set forth the particular item alleged to be

false. See

Lange v. United States (1942), 161 F. (2d) 699

(7 C. A.);

Gleckman v. United States (1935), 80 F. (2d) 394

(8 C. A.), certiorari denied, 297 U. S. 709;

Lustig v. United States (1947), 163 F. (2d) 85 (2

C. A.), certiorari denied, 332 U. S. 775.

Sabourin v. United States (1946), 157 F. (2d) 820

(2 C. A.), certiorari denied, 329 U. S. 800;

Locke v. United States (1947), 166 F. (2d) 449

(5 C. A.), certiorari denied, 334 U. S. 837;

United States v. Chapman (1948), 168 F. (2d) 997

(7 C. A.);

Barcott v. United States (1948), 169 F. (2d) 929

(9 C. A.), certiorari denied Feb. 14, 1949, 60 S.

Ct. 602;

Maxfield v. United States (1946), 152 F. (2d) 593

(9 C. A.), certiorari denied, 327 U. S. 794;

United States v. Berman, 75 F. Supp. 789 (D. C. N.

D. Georgia) ;

Rose v. United States, 128 F. (2d) 622 (10 C. A.);

United States v. Farrington, 11 F. Supp. 215 (D. C.

M. D. Penn.) ;

United States v. Yoffe, 52 F. Supp. 175 (D. C. D.

Mass.) ;

Singer v. United States, 58 F. (2d) 74 (3 C. A.).

In our cases, where the item alleged to have been omit-

ted was ‘‘Dividends,’’ the trial court ordered a bill of par-

ween tS

_ —————

9

ticulars to show the names of the corporations from which

such dividends had been received; See Barcott v. United

States, 169 F. (2d) 929, where a similar motion was sus-

tained as to ‘‘ Dividends.’’

During the trial of our cases, the trial judge held that

such break-down was material. (R. 89, 259, 261.) It was

after the defendants had waived their right to a jury trial

on the facts as to whether they had received ‘‘Dividends”’

as defined by the Statute (Sec. 115(a) Internal Revenue

Code), and after they had rested their cases, on June 28,

1948 (R. 262), without introducing evidence on either of

the ‘‘Dividend’’ or ‘‘Joint venture’’ theories, and nearly

eight weeks after the trial was closed on August 18, 1948

(R. 274) that the trial judge first intimated, and decided,

when rendering judgment, that he could not see how the

defendants could be prejudiced by labeling the income as

‘‘dividends’’ or ‘‘profits of a joint venture’’ or merely

‘other income.’’ (R. 297.)

The decision in our cases frustrates the intent of Con-

gress to harmonize and to unify the procedure throughout

the United States in tax evasion cases; it destroys the

long established practice and policy of the Department of

Justice in setting out in indictments for tax evasion the

material and essential facts broken down, to comply with

due process as required by the Constitution, for the in-

formation of the accused in cases of this character.

To permit the opinion in the instant cases to stand un-

decided by this Court, leaves this very material question

open and means that some courts will hold that the allega-

tions itemizing the break-down are surplusage, as the Sev-

enth Circuit has done in our cases, and others may hold that

such break-down is essential and material; See:

Singer v. United States, 58 F. (2d) 74 (3 C. A.);

Rose v. United States, 128 F. (2d) 622 (10 C. A.);

— RATT F SPROREREA IY eer E RR: A soeeyuett

ee

United States v. Molasky, 118 F. (2d) 128, 131 (7

C. A);

United States v. Farrington, 11 F. Supp. 215 (D. C.

M. D. Penn.) ;

United States v. Yoffe, 52 F. Supp. 175 (D. C. D.

Mass.).

The decision of the Seventh Circuit in our cases seems

to be in conflict with the reasoning of said decisions of

the Third and Tenth Circuits, and certiorari should now

be granted to settle this vital, national question.

But the instant cases present a far more important ques-

tion, of greater and more far-reaching consequence, than

the determination of whether such break-down is material

and necessary. Here, the break-down was actually made

by the Grand Jury in the indictments, and it served to be-

guile and deceive the defendants; they relied on such al-

legations as being essential and material; they were en-

couraged by the trial court to believe that such allega-

tions were material (R. 89, 259, 261); the Department of

Justice believed such allegations to be material.

Consequently, defendants now very insistently challenge

the right and the fairness of the Department of Justice in

adopting this universal practice of alleging such break-

down in the indictments, and, then, after conviction on a

theory not outlined in the indictments, contend that such

break-down was surplusage. In this situation, defendants

deny the constitutional power of the lower courts to decide

that such allegations were surplusage. The highest es-

sence in the concept of due process is involved in and is

violated by such illegal procedure.

Section 145(b), Internal Revenue Code, is violative of

the Sixth Amendment to the Constitution if the taxpayer

can be specifically charged with having omitted a speci-

Perna ntoarrnegemacinn ssietemeaycegn ts VEE ES

=

SOOT res REN, aig a

—

fied amount of ‘‘Dividends’’ from his return, and then be

convicted of having had receipts from a joint venture which

were omitted from his return, but which was not charged

in the indictment.

11

The language of Section 145 (b) is very broad, and pro-

vides severe punishment for a tax evasion ‘‘in any man-

ner’’; but the generality of this language does not justify

a violation of the Sixth Amendment; it emphasizes the

absolute necessity of requiring indictments to set out the

specific manner in which the offense was committed, in-

cluding the break-down of the particular items involved.

Our cases fully demonstrate the imminent danger to an

accused of allowing an abandonment of this practice; pe-

titioners were charged with omitting ‘‘Dividends’’ from

their returns. By denying the writs, and thus giving tacit

approval to the decision of the Seventh Circuit, that such

allegation is surplusage, the door is wide open for grave

injustice to taxpayers charged with evasion, for, under

such charge, the accused can hereafter be convicted of hav-

ing omitted ‘‘Salaries,”’ ‘‘Interest,’’ ‘‘Annuities,’’ ‘“Net

Gains from sale or exchange of property,’’ ‘‘Rents and

Royalties,’’ ‘‘Net profit from business or profession,’’ ‘‘In-

come from partnerships, or other income’’ or any one or

more thereof. Such result would be a palpable violation of

the Sixth Amendment. If Section 145 (b) is susceptible to

an interpretation which will permit any such result, then it

is unconstitutional and void.

The indirect method, finally adopted by the prosecution

in our cases below, and approved by the Court of Appeals,

of treating the indictments in effect as though the sub-

stance thereof had been altered, although not physically

changed, by disregarding as surplusage averments which

had been placed therein by the Grand Jury following the

practice of the Department of Justice in its effort to stand-

Arts SERRE TE RID eta hee Ns Dee ieiete nya oe TRS eR

12

ardize what it believed to be essential and material aver-

ments in indictments of this character, is in clear violation

of the constitutional rights of petitioners, and all others

accused of crimes of this character, and is in conflict with

the applicable decision of this Court in Ex Parte Bain,

121 U.S. 1, and contrary to the decisions of other circuits,

Edgerton v. United States, 143 F. (2d) 697 (9 C. A.);

Dodge v. United States, 258 F. 300, 305 (2 C. A.);

Butler v. United States, 20 F. (2d) 570 (8 C. A.);

Rule 7 (c) Federal Rules of Criminal Procedure.

To prevent grave injustice, not only to petitioners, but

to all others accused of tax evasion, necessity requires the

consideration and judicial determination by this Court of

petitioners’ questions in order to obtain uniformity of the

judgments in the lower courts. The decision of the Seventh

Circuit has so far departed from the accepted and usual

course of judicial proceedings, and sanctioned such de-

parture by the lower court, upon this matter of national

importance in all tax evasion prosecutions, as to call for

the exercise of this Court’s power of supervision.

AS TO QUESTION TWO

Petitioner’s request for a rehearing upon this question

is limited to their contention that the proof of the receipt

of ‘‘gross income’”’ in commercial transactions does not

make a prima facie showing of violation of Section 145 (b)

of the Internal Revenue Code, and does not shift the bur-

den to the defendants of proving their cost and expenses

in such transactions. The cases were tried, and the con-

victions affirmed, upon the erroneous theory that they

should have proved their innocence after the government

introduced evidence showing gross receipts.

The practical effect of disputing this part of the decision

below is to get a decision of this Court which will make

a a i aR ak ads Os a

_ at

13

uniform all decisions in prosecutions for tax evasions

where it is claimed by the accused that the burden rests

upon the Government to show, beyond a reasonable doubt,

that he actually had a net income upon which he owed a

tax that he did not pay, and where he contends that proof

of gross income from mercantile transactions does not

make a prima facie showing of a violation of Section

145 (b).

Petitioners especially dispute that part of the decision

below that,

*“‘Any possible prejudice to the defendants is seen

to be even more remote if we consider the fact that

defendants’ principal defense is that the money re-

ceived was merely gross income from which they

should be allowed to deduct expenses which exceeded

the income. If defendants were relying on the Gov-

ernment’s original theory of joint venture, as they

now claim they were, why did not they attempt to

rebut the government’s case by introducing evidence

of the expenses which they assert were incurred in

the sale of the whiskey? Sweh evidence would have

been admissible under the joint venture theory, but

not under the dividend theory. Yet they rested their

case without introducing any evidence.”’ (R. 279.)

(Emphasis supplied. )

Where it is shown that gross income was received in a

joint venture, and such gross income was derived from

buying and selling an article of merchandise where costs

and expenses in dealing therein are also clearly proven, the

Government must go further and show either that such

costs and expenses did not exist, or, that they were less

than the gross receipts. Especially is this true where, as

in this case, defendants had furnished detailed informa-

tion to the government as to such costs and expenses more

than two years before the trial was had. Supplying such

— PRORAE TTA eNc th Ba ER rey pin wh Bn ERNE SETI Pee

ca

14

facts to the government so far in advance of the trial dis-

proved felonious and wilful intent; it created a presump-

tion of innocence, and the Government could not secure

conviction without proving beyond reasonable doubt that

such cost and expenses were not had, or that there was no

reasonable excuse for claiming these. See:

Gleckman v. United States, 80 F. (2d) 394, 395-399;

Bryan v. United States, 175 F. (2d) 223;

Jones v. United States, 164 F. (2d) 398, 400 (5

3 C. A.);

: Young v. United States, 97 F. (2d) 200 (5 C. A.).

This is a rule of law which affects the trial of all income

{ tax evasion cases.

Defendants contend that the true rule which should de-

termine their rights, and the rights of all others tried for

tax evasion, is the one adopted by the Seventh Circuit in

United States v. Fenwick, No. 9895, decided since our pe-

tition was filed, on November 4, 1949, not yet reported,

but a copy of such opinion being the Appendix to defend-

ant’s reply brief heretofore filed; in the Fenwick decision,

which is an income tax case, the court holds that the gov-

ernment has the burden of proof; that the burden never

shifts to the defendant; that circumstantial evidence must

be of such character as to exclude every reasonable hypoth-

esis except that of guilt; the defendant is not compelled

to take the stand; he is not compelled to make proof that

he is innocent; he must be proved guilty beyond all reason-

able doubt. In that case, the question was whether all of

the assets of the defendant had been included in the gov-

ernment’s computation of net worth, and the court said that

where there is uncertainty on that question, such compu-

tation could not be relied upon, and that essential proof

of no other assets was the corner-stone of the govern-

ment’s evidence. See, also,

_ peal

at's 4 Sesh a

STRELA RS ai ee A ep Sees mie een ee ces eeceeTprrneg ann ie int aga ee

—

Bryan v. United States (5 C. A.), 175 F. (2d) 223,

certiorari granted, No. 178, October term, 1949.

The burden does not rest upon defendants to supply any

evidence upon any of these matters.

Jones v. United States, 164 F. (2d) 398 (5 C. A.).

If uniformity in decisions of this character is to be

achieved, this Court should grant the writs prayed for by

petitioners and decide, where the evidence is cireum-

stantial, whether a conviction of fraudulently attempting

to evade the payment of an income tax can rest upon evi-

dence which shows the receipt of gross income from dealing

in an article of merchandise, where costs and expenses are

shown to have resulted from such dealing, without the gov-

ernment proving that either such costs and expenses did

not exist, or they were less than the gross receipts, or there

was no reasonable excuse for claiming costs and expenses.

AS TO QUESTION THREE

Petitioners present to this Court the final judgment of

the Seventh Circuit which decides that, ‘‘under the peculiar

circumstances of the case,’’ the Judgment of conviction on

the conspiracy charge must be reversed because ‘‘it em-

bodies the same crime as that based on the substantive

charges,’’ and other reasons stated. (R. 399, 400, 401,

402.)

We do not here have the question as to whether the

commission of the substantive offense, and a conspiracy to

commit such offense, are separate and distinct offenses

within the rule that a conviction for conspiracy to commit

the one will not bar a conviction of the other, as in Pinker-

ton v. United States, 328 U. S. 640. Such question was

eliminated by the final decision of the Seventh Circuit that

under the peculiar circumstances in our cases both charges

embodied the same crime.

15

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16

The Court of Appeals adjudged that the trial court in the

instent cases failed to differentiate between the proof rel-

ative to the substantive charge and the conspiracy charge.

_ Yet it was the same inadmissible proof in all cases. The

- Court of Appeals reversed only as to the conspiracy

charge.

‘

The cases of Kotteakos v. United States, 328 U. S. 750,

_ and Fiswick v. United States, 329 U. S. 211, are decisive

' of our question here and there should be a reversal.

There can be no doubt remaining after reading the Mem-

orandum Opinion of the trial court (R. 275-282) that in

_ large part he premised his determination of guilt in all

of the cases, upon the very proof which caused the Court

: of Appeals to reverse the conspiracy charge and which

got into the Record because, as Circuit Judge Duffy said

~ (R. 401), the trial court could not ‘‘entirely avoid the

i evil of opening the door at the trial for evidence inadmis-

sible except for the conspiracy charge’’ on a consolidated

> trial.

On the decision of this Court in the case of Krulewitch

v. United States, 336 U. S. 440, accentuated by the concur-

ring opinion of Mr. Justice Jackson, the writ prayed for

herein should be granted. Otherwise, the condemned un-

lawful practice which ‘‘is an abuse of the judicial process’’

(R. 400), will continue, notwithstanding that such proce-

dure often constitutes a serious threat to a fair adminis-

tration of justice.

Krulewitch v. United States, 336 U. S. 440, 445, 446.

PE ey Ee

Such prejudicial error being so shown by the final judg-

ment of the Seventh Circuit as to the conspiracy charge,

it necessarily follows that error contaminated the trial and

confused the court as to the substantive charges. Peti-

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17

tioners contend that ‘his question requires consideration

by this Court as it is very important in the administration

of criminal law.

AS TO QUESTION FOUR

The final judgment of the Seventh Circuit reversing the

conviction on the conspiracy charge partially because it

embodied the same crime as that upon which the substan-

tive charges were based, establishes the fact that prejudi-

cial error occurred in the trial against the petitioners;

such error could not have occurred except for the reason

that said causes were wrongfully consolidated for trial,

over petitioners’ objections (R. 63) and in contravention

of Rules 8 and 13 of the Federal Rules of Criminal Pro-

cedure.

Petitioners respectfully urge that the consolidation of

their causes resulted in a gross miscarriage of justice as

to them, and the decision which is disputed in this regard

is not only violative of their constitutional and legal rights,

but it is a question involving a principle of tremendous

importance to other litigants in the administration of

federal criminal law and procedure.

That such conclusion must follow, is clearly evidenced

by the reasoning of Circuit Judge Duffy (R. 401) wherein

he says:

‘‘Courts have protested vigorously against the cur-

rent and perhaps growing habit to indict for conspir-

acy in addition to the substantive offense, and have

pointed out that such procedure often constitutes a

serious threat to a fair administration of justice.

Krulewitch v. United States, 336 U. S. 440, 445-446.

As far back as 1925, the Conference of Senior Circuit

Judges pointed out the dangers of such practice. And

any judge with trial court experience knows that the

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charge of conspiracy in an indictment is often used

at the trial for the purpose of getting evidence into

the record which would otherwise be inadmissible, and

that the trial judge is often powerless to prevent such

abuse. As was stated in the Krulewitch case, supra

(p. 453), ‘But the order of proof of so sprawling a

charge is difficult for a judge to control’; * * but he

cannot entirely avoid the evil of opening the door at

the trial for evidence inadmissible except for the con-

spiracy charge.’’ (Emphasis supplied).

Judge Duffy was so strongly convineed of the prejudi-

cial effect resulting to the defendants from the consolida-

tion of the two charges which were made against them,

that he also said:

‘‘This is the kind of a case, in my opinion, where

it is an abuse of judicial process to charge conspiracy

when practically the same offense has been charged in

the substantive counts.’’ (R. 400.)

Chief Judge Major said:

‘‘T think the judgment premised on conspiracy

should be reversed because under the peculiar circum-

stances of the case it embodies the same crime as that

based on the substantive charges. A more conclusive

reason for reversal, however, arises from the failure

of the Court to differentiate between the proof rele-

vant to the substantive offense and that relative to the

conspiracy charge.’’ (R. 399.)

Petitioners very earnestly urge that the final judgment

of the Court of Appeals reversing the conspiracy charge is

conclusive that prejudicial error was committed against

petitioners because of the wrongful consolidation of said

causes.

The opinions of Chief Judge Major and Circuit Judge

Duffy (R. 398-402) present strong, vigorous, judicial rea-

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sons why this Court should grant the writs prayed for

herein, and clearly show that substantial prejudice has

resulted to the defendants by the proceedings below, and

they likewise show that this question involves a very im-

portant principle of criminal law which it is vital for this

Court now to decide.

19

CONCLUSION

This Court cannot say that the judgments in these cases

were not substantially swayed by the prejudicial errors

which we have pointed out and it is impossible to conclude

that the substantial rights of defendants were not affected

or that justice has been done by reversing part of the con-

victions, merely.

Petitioners urge that their petition presents tremendously

important principles, and involves the decision of questions

whose resolution will have immediate importance far be-

yond the particular facts and parties affected, especially

in income tax evasion cases.

Prejudicial error being now judicially established, peti-

tioners respectfully request this Court to reconsider its

order of December 5, 1949, denying certiorari herein.

It cannot be said that petitioners have been justly tried

and fairly convicted of any of the charges for which they

were tried where it is adjudicated that their conviction is

tainted with judicial inability to differentiate as to the

evidence applicable to the charges against them; the same

errors are bound to affect many others unless this Court

shall intervene and decide the questions which are pre-

sented; uniformity of decisions will only be established by

the decision of this Court on these questions.

ear PRT OEP NORE ISTE TOY HABER A OES SRA EOIN SBE TL EEN INE OE ETRE

20

It is respectfully urged that the order denying certiorari

be set aside and that certiorari be granted as prayed for in

the petition.

Dated this 19th day of December, 1949.

ALBERT Warp,

PatmMer K. Warp,

318 Insurance Bldg.,

Indianapolis, Ind.,

Wii B. Harret.,

Republic Bank Bldg.,

Dallas, Texas,

Counsel for Petitioners.

a

CERTIFICATE OF COUNSEL

We, Albert Ward, Palmer K. Ward and William B.

Harrell, counsel for petitioners, do hereby certify that the

foregoing Petition for Rehearing is presented in good faith

and not for delay, and that said Petition is restricted to

grounds which are confined to intervening circumstances of

substantial and controlling effect, and to other substantial

grounds available to petitioners although not previously

presented, as required by Rule 33 (2) of the Rules of the

United States Supreme Court.

Dated this 19th day of December, 1949,

ALBERT Warp,

Paumer K. Warp,

Wim B. Harrew,

Counsel for Petitioners.