Petition for Writ of Certiorari — Davena v. United States

OcToBER TERM, 1952

No. 34,2

' «

—

\

Wim R. Davena, JR.,

Petitioner,

Vs.

Untrep States or AMERICA,

Respondent.

4

PETITION FOR WRIT OF CERTIORARI

to the United States Court of Appeals for

the Ninth Circuit

AND

BRIEF IN SUPPORT THEREOF.

———_

A. M. MULL, JR.,

515 Capital National Bank Building, Sacramento, California,

Attorney for Petitioner.

Subject Index

Page

Petition for writ of certiorari ................... nexakeen 1

The im@iotmemt, semiemes, o8e. ... 5... 5c ccc ccc cs cccccccce 2

Statement of the case presenting the questions involved. .... 4

UME SIN i oa s b.da ka bee eka coed cceuceabec 17

Bs Gea GE TD Qa io ok coins cakdconsacecavecs 17

2. The decision and judgment of the Court of Appeals... 17

3. Basis upon which it is contended the Supreme Court

has jurisdiction and cases in support thereof.......... 17

a I III 5k. vs cb cde ciwccauasscaeeenewones 18

Points relied upon for the issuance of a writ of certiorari.... 19

Brief in support of petition for writ of certiorari........... 23

The opinions and judgments of the courts below........... 23

SD 00:0 ccsunbCancccivedieckedacactecienewuenee 24

SE OE ENED 55 vic cktesctascdocekukcs canes 24

Specification of errors relied upon................0000eeeee 24

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Table of Authorities Cited

Cases Pages

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Fenwick vo United States, 177 Ped. (2d) 488 (Cir. 7).

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Rules

Supreme Court Rules, Rule 38, Par. Sb. ee i. oe

In the Supreme Court

OF THE

Runited States

Ocroner Tena, toe

No.

Wirtaam Ro Davena, dn,

Petitioner,

vs.

Unrrep Srares or America,

Respondent.

PETITION FOR WRIT OF CERTIORARI

to the United States Court of Appeals for

the Ninth Circuit.

To the Honorable Fred M. Vinson, Chief Justice of

the United States, and to the Honorable Associate

Justices of Ny Supreme Court of the U ited

States:

The petition of William Ro Davena, dr. for a writ

of certiorary to the United States Coart of Appeals

for the Ninth Cireuit respectfully shows;

| _

THE INDICTMENT, SENTENCE, ETC.

Petitioner was indicted (R. Tr. Vol. I, p. 10) for

three violations of attempting to evade income taxes.

(26 U.S.C. 145b.)

Count 1, charged that on or about the 15th day of

March, 1945, in the Northern District of California,

Southern Division, William R. Davena, Jr., late of

Benicia, California, who during the calendar year

1944 was married, did wilfully and knowingly attempt

to defeat and evade a large part of the income tax

due and owing by him and his wife to the United

States of America for the calendar year 1944, by

filing and causing to be filed with the Collector of

Internal Revenue for the First Internal Revenue Col-

lection District of California, at San Francisco, Cali-

fornia, a false and fraudulent joint income tax return

on behalf of himself and his said wife, wherein it

was stated that their adjusted gross income for said

calendar year was the sum of $3,457.00 and that the

amount of tax due and owing thereon was the sum

of $262.97, whereas, as he then and there well knew,

their adjusted gross income for the said calendar

year was the sum of $7,244.92, upon which said ad-

justed gross income there was owing to the United

States of America an income tax of $1,206.03.

Count 2, charged that on or about the 15th day of

April, 1946, in the Northern District of California,

Southern Division, William R. Davena, Jr., late of

Benicia, California, who during the calendar year

1945 was married, did wilfully and knowingly at-

tempt to defeat and evade a large part of the income

3

tax due and owing by him and his wife to the United

States of America for the calendar year 1945, by

filing and causing to be filed with the Collector of

Internal Revenue for the First Internal Revenue

Collection District of California, at San Francisco,

California, a false and fraudulent joint income tax

return on behalf of himself and his said wife, wherein

it was stated that their net income for said calendar

year was the sum of $2,972.87 and that the amount of

tax due and owing thereon was the sum of $253.76,

whereas, as he then and there well knew, their joint

net income for the said calendar year was the sum of

$6,328.52, upon which said net income there was owing

to the United States of America an income tax of

$1,085.26.

Count 3, charged that on or about the 4th day of

April, 1947, in the Northern District of California,

Southern Division, William R. Davena, Jr., late of

Benicia, California, who during the calendar vear

1946 was married, did wilfully and knowingly attempt

to defeat and evade a large part of the income tax due

and owing by him and his wife to the United States

of America for the calendar year 1946, by filing and

causing to be filed with the Collector of Internal

Revenue for the First Internal Revenue Collection

District of California, at San Francisco, California,

a false and fraudulent joint income tax return on be-

half of himself and his said wife, wherein it was

stated that their net income for said calendar vear

was the sum of $3,620.00 and that the amount of tax

due and owing thereon was the sum of $240.00,

4

whereas, as he then and there well knew, their joint

net income for the said calendar year was the sum

of $14,354.88, upon which said net income there was

owing to the United States of America an income tax

of $3,374.96.

After trial by jury petitioner was convicted on all

three counts and sentenced to thirty months’ im-

prisonment on each count, sentences to run concur-

rently, and to pay a fine of $2,500.00.

At the conclusion of all the evidence petitioner

moved the Court for judgments of acquittal (R. Tr.

Vol. II, p. 213) which motions were denied. A mo-

tion for a new trial was made and denied (R. Tr.

Vol. II, p. 234).

STATEMENT OF THE CASE PRESENTING THE

QUESTIONS INVOLVED.

The Government in this case called as its first wit-

ness one John H. Reedy, Deputy Collector of Internal

Revenue, First District of California (R. Tr. p. 28,

lines 5-11). Mr. Reedy produced the original tax

returns of petitioner for the years 1943, 1944, 1945,

1946, 1947 and 1948. The 1943, 1944, 1945 and 1946

returns were introduced as Respondent’s Exhibits

1, 2, 3 and 4 (R. Tr. p. 21, lines 12-15).

The second witness called by the Government was

one Jerry Robinson who testified that she ran a room-

ing house in Benicia during the years 1944-1946 and

at times on the side a house of prostitution (R. Tr.

p. 33, lines 8-12). Mrs. Robinson was asked if she

5

had any financial transactions with the petitioner

during the years 1944-1946 and in reply to this ques-

tion testified that she gave the petitioner a Christmas

present now and then but that it did not amount to

very much (R. Tr. p. 33, lines 14-16). She further

testified that she really did not know how much money

she gave to the petitioner during that period of time

but that it might have been three or four hundred

dollars. However, she further testified that she really

didn’t know how much she had given the petitioner

“because if I said I did I don’t really remember. I

may have given him $50.00 at Christmas but I don’t

really know’. (R. Tr. p. 33, lines 22-24). Mrs.

Robinson testified on cross-examination as follows:

‘“Mr. Seawell. Q. You stated, Mrs. Robinson,

that you gave him a Chirstmas present or two, is

that correct?

A. Yes, sir.

Q. And that is the only occasion upon which

you recall giving him any money, is that correct ?

A. Well, I don’t really know, I may have

given him a little present some other——” (R.

Tr. p. 34, lines 19-25),

The witness was asked as to whether she could

recall ever having given the petitioner any money

other than at Christmas time as a Christmas present

and she testified that the only other present she re-

ealled giving the petitioner was on the occasion when

she had had a lot to drink and the petitioner told

her to go home. She did not reeall the amount of

money that she gave him but testified ‘the was kind

to me so I just gave him a little present’? (R. Tr.

6

p. 36, lines 7-12). The witness was asked how she had

arrived at her estimate of having given the petitioner

presents in the sum of three hundred or so dollars

during the years in question and she testified as fol-

lows in that regard:

“Mr. Seawell. @. You have an estimate of

giving him three hundred and some odd dollars.

Now, how did you arrive at that figure?

A. Well, I don’t know, I just arrived at it

because I figure three Christmasses would be 150,

and then a little bit—I don’t know; I said I don’t

know really.

Q. You don’t really know how much you gave

him, do you?

A. That is right, I don’t really know how

much.’” (R. Tr. p. 36, lines 12-19.)

‘‘Mr. Seawell. Q. But you base your recol-

lection on that fact that there were three Christ-

masses between 1944 and 1946 and you just

imagined or assumed that you gave him $50.00

each Christmas, is that correct?

A. Yes, sir.

Q. You have no independent recollection of

doing that?

A. No, I don’t.” (R. Tr. p. 37, lines 2-8.)

The Government then called one Frank Rernardo,

who is the manager of the Bank of America at Benicia

and he produced the records of the bank setting forth

the amount of money the petitioner had on deposit

with that bank. These records reflected that peti-

tioner had the following sums in his savings account:

December 31, 1943 $504.08

1944 920.39

1945 929.61

1946 1090.05

and that the above figures included accrued interest

(R. Tr. p. 39, lines 1-9). The witness further testified

that the petitioner also had a commercial account and

that the balances were as follows:

December 31, 1943 $635.60

1944 791.30

1945 1061.60

1946 847.42

(R. Tr. p. 39, lines 13-18.)

The witness also testified that the petitioner pur-

chased a cashier’s check on December 7, 1945 in the

sum of $3,758.56 (R. Tr. p. 39, line 24 to p. 40, line

2).

The next witness called by the respondent was one

Robert E. Arvedi, an officer of the main branch of the

Bank of America at Vallejo, California. The witness

testified that the petitioner opened a savings account

with that bank on the 15th day of July, 1946 and

that the only deposit made to that account was the

initial deposit in the sum of $6,000.00 and that the

balanee in said account as of December 31, 1946 was

$6,000.00 (R. Tr. p. 40, line 23 to p. 42, line 8).

Respondent then called Mr. Gary Rees, manager

of the Solano County Title Company (R. Tr. p. 42,

line 23). He testified that his records showed that

the petitioner paid to his company the sum of

$3,758.66 on the 8th day of December, 1945; that

this sum was received in the form of a cashier’s check

drawn on the Bank of America at Benicia (R. Tr.

p. 48, lines 11-15).

The next witness called by respondent was a Mrs.

Leonora F. Silveira (R. Tr. p. 45, line 1) who testi-

fied that she sold a house to petitioner for $4,913.00

in July of 1943 and that the petitioner made monthly

payments on said purchase in the sum of $35.00 per

month (R. Tr. p. 47, lines 11-20).

The next witness called by respondent was a Mrs.

Mary Russold who testified that the petitioner paid to

her husband $750.00 for the remodeling of certain

property in the year 1945 (R. Tr. p. 48, lines 23-25)

and $400.00 in 1946 (R. Tr. p. 49, lines 1-4).

The next witness called by respondent was Gene-

vieve Bennett who testified that she had a financial

transaction with petitioner either in the latter part

of 1946 or the first part of 1947 (R. Tr. p. 51, lines

16-19). That the financial transaction involved the

purchase of a house at 125 West J Street, Benicia, by

the petitioner for $7,000.00 (R. Tr. p. 51, line 22 to p.

52, line 1).

The next witness called by respondent was E. R.

Tretheway, credit manager for the Earl C, Anthony

Automobile Company, San Francisco (R. Tr. p. 56,

line 7) whose records reflected that on May 31, 1944

a 1942 model four-door Packard sedan was sold to the

City of Benicia for the sum of $2,172.91 and that

the car was delivered to the City of Benicia (R. Tr.

p. 56, line 16 to p. 57, line 5). It also appears from

9

his testimony that the car was paid for by the peti-

tioner but was to be used by petitioner in his official

capacity as Chief of Police of Benicia (R. Tr. p. 57,

line 25 to p. 58, line 12).

Next the respondent called one Frank Coronado,

automobile dealer of Vallejo, California who testified

that petitioner purchased a 1946 Packard Sedan,

September 11, 1946 for $2,611.11 and that he re-

ceived in trade a 1942 Packard automobile for which

he allowed petitioner $1,268.00 credit ( R. Tr. p. 59,

lines 18-24). However the witness further testified

that he repurchased the automobile on April 20, 1948

for the sum of $2,500.00 (R. Tr. p. 61, lines 4-7).

The next witness called by respondent was Anna

G. Pine who testified that she was the City Clerk of

the City of Benicia; that the City of Benicia paid

the petitioner $40.00 per month plus gasoline and

oil to be used by him in the operation of a Packard

automobile; that the payments in the amount of

$40.00 started in September, 1946 and that prior

thereto the city had paid all maintenance costs for

the automobile (R. Tr. p. 65, lines 3-22).

The next witness called by respondent was Donald

J. Thurman, special agent of the Bureau of Internal

Revenue. Mr. Thurman’s testimony was in regard

to statements which he had taken from the petitioner.

His testimony was given over the objection of the

petitioner (R. Tr. p. 73, lines 1-25). Mr. Thurman

testified that he first contacted the petitioner on Feb-

ruary 23, 1949; that he at that time questioned him

in regard to his income tax returns for the years

10

1944, 1945 and 1946. The petitioner advised Mr.

Thurman that he had received a gift and/or in-

heritance about three years prior thereto in the sum

of $5,000.00; that this money was received in cash

from his father and that this money had been left to

petitioner by his mother at the time of her death

(R. Tr. p. 80, lines 3-8).

The agent further testified that petitioner advised

him that he had received a few gifts from one Jerry

Robinson, these gifts consisting of $50.00 a couple of

times (R. Tr. p. 81, line 24 to p. 82, line 3).

The agent further testified that he received an af-

fidavit from petitioner, the same being dated the 5th

day of May, 1945, which affidavit purports to state

‘1937 gift from mother $5,000.00’. It is also to be

noted at this point that there is a line drawn through

this statement of petitioner. This document is Ex-

hibit No. 8 and it is apparent from the document that

an attempt had been made to delete this statement

from the affidavit (R. Tr. p. 85, line 25 to p. 87, line

8).

Mr. Thurman testified that he again interviewed the

petitioner on the 22nd day of July, 1949 (R. Tr. p.

87, lines 9-11) and in questioning him asked him if

he would explain why he had omitted certain alleged

income from his tax returns; that the petitioner at

that time stated ‘‘I figured they were just handouts,

a sort of a gift, I didn’t know I had to pay income

taxes on them. I don’t know too much about it.”

(R. Tr. p. 89, lines 11-16).

ll

The agent further testified that at the end of the

interview on July 22, 1949 a Mr. Russold asked the

petitioner ‘You didn’t report the full amount of your

income; that is, you haven’t declared the gratuities

for fear of apprehension from local authorities.”’

And then he asked him was it for the purpose of evad-

ing his income taxes, and Chief Davena replied, ‘‘ Ab-

solutely not.’’ (R. Tr. p. 89, line 24 to p. 90, line 3).

The agent further testified that at the time of his

first interview with petitioner he asked the petitioner

if he did not know that the payments that he had

received were taxable and the petitioner replied yes

that he knew the amounts were taxable because there

was so much information about it in the newspapers

nowadays (R. Tr. p. 90, lines 15-21).

The agent testified that the petitioner took him to

the Bank of America and opened a safe deposit box

which he, the petitioner, had rented and in the agent’s

presence, and that he, the agent, made an inventory

of the items in the safe deposit box (R. Tr. p. 107,

line 21 to p. 108, line 4); that the safe deposit box

contained a marriage license of the petitioner, a policy

of title insurance on a home, five $25.00 bonds, two

$100.00 bonds; that the bonds were in the name of the

children of petitioner; that there was nothing of an

unusual nature in the safe deposit box (R. Tr. p. 108,

line 21 to p. 109, line 19).

The agent further testified that petitioner advised

him that in the year 1947 he had reported $800.00 as

promotions on his income tax return and also advised

him he was going to report approximately $1,900.00

12

as promotional income which he had received in the

year 1948 (R. Tr. p. 114, lines 15-20).

The agent also testified that the petitioner advised

him that he had a net worth of about $5,300.00 when

he was married in 1988 (R. Tr. p. 123, lines 8-18).

The agent also was asked the following question

and gave the following answer:

*Q@. Now, any place in your records, the notes

that you took, or anything that you remember, at

any time did Chief Davena in the conversation

of February 23rd or the conversation of March

8, 1949, tell you that he had received any gifts

from anyone other than the three $50.00 gifts

from Jerry Robinson prior to 1947?

A. No.’”’ (R. Tr. p. 130, lines 13-19.)

The agent in referring to the real estate alleged

to have been purchased and paid for by the petitioner

in the year 1946 for the sum of $7,000.00 testified that

the transaction in question might have taken place

in 1947 rather than in 1946 and that if this were so

that there would necessarily be a correction in the

net worth of the petitioner in the sum of $7,000.00

(R. Tr. p. 141, lines 6-18). The agent further testified

that of course it was possible that the petitioner could

have received the $7,000.00 and/or $7,150.00 which

was paid on the property in 1947 by borrowing the

money or in many other different ways (R. Tr. p. 142,

lines 1-13).

The agent also testified that he received a letter

from Harold M. Simon, attorney for petitioner, some

time after December 7, 1949 calling his attention to

13

the fact that the petitioner had made several errors

in his statement to the agent and wished to correct

them. The agent testified that after receiving said

letter that he did not communicate with anyone in

regard to the errors and did not make the corrections

called to his attention (R. Tr. p. 153, line 21 to p.

154, line 3).

The next witness called by the respondent was

Robert W. Davis, Deputy Collector of Internal Rev-

enue, First District of California (R. Tr. p. 162, lines

11-17). He testified that he had a conversation with

the petitioner on or about the 24th day of October,

1949 (R. Tr. p. 163, lines 1-3) ; that at that time peti-

tioner stated that he wished to cooperate with the

Department of Internal Revenue in any way possible

and that he had done so up until that time. The agent

testified that the petitioner had cooperated with his

department and that he, the petitioner, stated ‘‘he

wanted to do what was right, and he stated that if he

had known these returns, these income tax returns,

were strictly confidential, that he would have reported

this outside income he had been receiving.”” (R. Tr.

p. 164, lines 9-14).

The agent further testified that he had made some

investigation of the petitioner’s charge accounts in

various stores in Oakland and Vallejo (R. Tr. p. 163,

lines 4-25), but that he did not attempt to ascertain

what indebtedness the petitioner had in stores other

than those referred to above.

The next witness called by the respondent was

Augustus V. Brady, Technical Adviser with the Penal

14

Division, the Chief Counsetler’s ofee of the Bureau

of Internal Revenue, San Francisco CR. Tr po 178,

lines IS24). 0 He testitied that he had made a number

of computations at the request of the respondent;

that these computations were based on hypothetical

questions whieh were submutted te hime by the re

spondent. “The witness made a mimnber of eomputa

tious for beth the petitioner and respondent. One of

the comiputations made for the respondent: assumed

that certam eleetrie trarus had a value of 00,00 as

of December St, 188. Another computation made

for the petitioner assumed that the trams had a value

of S1500Q.00, as of December Sb, 143 ch. Tr. }. Yh,

lines TIN). The witness then at the request of the

petitioner computed the amount of tax which the

petitioner would ewe fer the vears Ub TI and

IMte assum: that he had tiled a separate return and

assunung that the trams im question had a value of

$1,500.00 as of December St, IMS and that petitioner

hd net purchase a house im Ee for STO. bat

rather purchased the house mi the vear IMT. The

Witness testified that the amount of tax due the re

spondent would have been 8485.00 for the vear Ut;

HILO for the vear Ito; and SL297.22 for the vear

He CR. Pr p. 225, line 1S te p. 226, line 8),

The agent was asked the following questions and

gave the following suswers in regard to the total de-

tieoney of the petitioner assuming he had tiled a

sepeirite Penurn:

“Mr. Maxwell TP wall withdraw the question,

Mr. Brady. Would the difference on a separate

return basis be substantial ?

W

AL There would be a deticieney tn any event,

Q. There would be a defictoney in any event?

A. Yea.” cH. Te. p. 220, lines 12-16.)

The witness further testided in regard te this sub

ject as follows:

Mr, Seawell, Qo And by a detictoney in any

event yeu mean a dollar ot two dothirs, or what

do you mean?

A. Wello ne Tamean it weuld be a deticiney

of, say, several hundred dollars,

Q. Well, it would be much lewer than these

figures on the blackboard he has just put on?

AL Well, they would be, ves,

Q. Well, let me have these figures,

A. Welko if Tecan just have CRhe witness

computes figures),

The Witness, QU. Bor Tt, $266.52,

Mr, Seawell, S266 and how much ¢

AL Bifty tfwe eeonts,

Q. Whats that?

AJ That is the detiereney in tax. based on

SOPUEALO COMpuration rather than jomt computa

tion,

Q. And you are using the figures in Govern

moent's Exhibit 8 is that correct?

AL ‘Phat is correct.

Mr. Maxwell. dust a moment. You are using

what tigures ?

Al Team using the figures before correction.

Mr. Maxwell, Before correction ¢

Mr. Seawell, You are using these totals here

Cindivating), aren't yout

A. Yes, 3,000 before the corrections,

Q. Yes, that is right,

16

A. You want the rest of that answer, Mr. Sea-

well? 1945?

Q. Yes.

A. $126.12. 1946, $296.00.

Q. The total deficiencies for all the years in-

volved in this case, then, would be $688.64, is

that correct ?

A. I wouldn’t say that. Based on the as-

sumption you gave me, yes.

Q. Yes, based on the question, the hypothetical

question, that is what you are testifying to as an

expert, isn’t that right?

A. Based on your hypothetical question.

Q. Now, let’s get back to this. This includes

some other person besides the defendant’s tax,

is that correct, or do you lead this jury to believe

that is what the defendant would owe?

A. That would be the joint returns of hus-

band and wife.

Q. That would be for both of them?

A. Yes.

Q. So he personally owed half of that?

A. Well, if they filed joint returns. They

made an election to file that way. He would be

liable jointly and severally for that tax.

Q. But the defendant in this case owed half

of that? That would be his part of it, so to

speak, would it not?

A. No, I think not. Community property is

pbased—the husband has control of the community

property. Wouldn’t he be liable for the wife’s

liabilities ?

Q. Under certain circumstances, and you can

will—his Honor will tell you—upon the death of

one you can will part of the property away and

not the other part.

17

A. But I feel on the joint return that would

be the amount of tax due and owing.

Q. But at any event these figures would be

correct under the question presented to you, is

that correct?

A. To the best of my ability.”’ (R. Tr. p. 229,

line 19 to p. 232, line 3.)

JURISDICTIONAL STATEMENT.

1. Jurisdiction of the Court.

The jurisdiction of this Court is invoked under

Title 28 U.S.C. see. 1254(1).

2. The decision and judgment of the Court of Appeals.

The decision and judgment of the Court of Appeals

was rendered on June 27, 1952 (R. Tr. Vol. I, p. 22).

Petition for rehearing denied on August 18, 1952

(R. Tr. Vol. I, p. 26).

3. Basis upon which it is contended the Supreme Court has

jurisdiction and cases in support thereof.

(a) The Court of Appeals’ decision that the extra-

judicial statements of the petitioner were properly ad-

mitted into evidence is in direct conflict with the

holding in the case of Fenwick v. United States, 177

Fed. (2d) 488 (Cir. 7). Under such circumstances,

this Court has jurisdiction to review the action of the

lower Court on certiorari (Dept. of Treasury v.

Ingram-Richardson Mfg. Co., 313 U.S, 252, 85 L. ed.

1313, Rule 38 of the Supreme Court, Par. 5b).

(b) The decision of the Court of Appeals holding

that the testimony of one witness that she had given

.

petitioner 300-400 dollars for favors was not sufficient

evidence for that Court to hold that it was proper to

introduce the extrajudicial statements of petitioner

in view of the further testimony of said witness

(Jerry Robinson) which is set forth under the head-

ing of ‘Statement of the Case Presenting the Ques-

tions Involved’’.

18

THE QUESTIONS PRESENTED.

The questions presented and raised by this petition

are as follows:

1. Must the respondent prove by competent evi-

dence beyond a reasonable doubt that petitioner re-

ceived substantial income during the years in ques-

tion which he did not report before the respondent

is allowed to introduce the extrajudicial statement

of the petitioner?

2. Is the burden of proof in a net worth case on

respondent to clearly and accurately establish by com-

petent evidence the petitioner’s net worth as of Jan-

uary 1, 1944 (the starting point of respondent’s case) ?

3. Is it incumbent upon the respondent to produce

; evidence (in a net worth case) that excludes all possi-

| ble available sources of taxable income from which the

increased net worth and the excess expenditures could

have been derived.

19

POINTS RELIED UPON FOR THE ISSUANCE OF A

WRIT OF CERTIORARI.

The writ of certiorari prayed for herein should

issue for each and all of the following reasons:

1. The Court of Appeals has stated that it would

not follow the holding in the case of Fenwick v.

United States, supra. By so holding the Court of

Appeals has done away with the rule that the uncor-

roborated extrajudicial statements of a defendant

are not admissible as evidence.

2. The Court of Appeals has held in effect that

the corpus delicti could be established by extra-

judicial declarations, confessions or admissions of a

defendant contrary to the holding in Pines v. United

States, 123 Fed. (2d) 825 (Cir. 8), Gulotta v. United

States, 113 Fed. (2d) 683 (Cir. 8).

3. The Court of Appeals has also held that the

amount of the alleged evasion of taxes need not be

substantial in order to support a verdict of guilt.

Wherefore, petitioner respectfully submits that this

Honorable Court issue a writ of certiorari to the

United States Court of Appeals for the Ninth Circuit,

to the end that the questions involved may he fully

presented and argued and justice done in the premises.

Dated, Sacramento, California,

September 15, 1952.

Respectfully submitted,

A. M. MULL, JR.,

Attorney for Petitioner.

CERTIFICATE OF COUNSEL.

I hereby certify that I am a member of the bar of

the Supreme Court of the United States and that I

am counsel for the petitioner in the above entitled

cause and that, in my judgment, the foregoing petition

is well founded in point of law as well as in fact and

that said petition is not interposed for delay.

Dated, Sacramento, California,

September 15, 1952.

A. M. Met, Jr.,

Attorney for Petitioner.

In the Supreme Cot

OF THE

Rnited States

October TERM, 1952

No.

.

WituiaM R. Davena, J R.,

Petitioner,

vs.

Unrrep STATES OF AMERICA,

Respondent.

J

BRIEF IN SUPPORT OF

PETITION FOR WRIT OF CERTIORARI.

oe

THE OPINIONS AND JUDGMENTS OF

THE COURTS BELOW.

The judgment of the trial Court was rendered and

filed on July 13, 1951 (R. Tr. Vol. I, p. 8).

The decision and judgment of the Court of Appeals

was rendered and filed on June 27, 1952 (R. Tr. Vol.

I, p. 25).

Petition for rehearing denied on August 18, 1952

(R. Tr. Vol. I, p. 26).

Tee

24

JURISDICTION.

The jurisdiction of this Court is invoked under Title

28 U.S.C., Section 1254(1).

The basis on which it is contended this Court has

jurisdiction and cases in support thereof are fully set

forth under the heading ‘‘Jurisdictional Statement’’.

STATEMENT OF THE CASE.

Petitioner was indicted (R. Tr. Vol. I, pp. 1-13) for

three violations of attempting to evade income taxes

(26 U.S.C. 145b; See. 145b, Internal Revenue Code).

Counts 1, 2 and 3 charged that petitioner, a married

man, in 1945, 1946 and 1947 filed a false and fraudu-

lent income tax return for the calendar years 1944,

1945 and 1946.

A full statement of the case is set forth in the fore-

going petition under the heading ‘Statement of the

Case Presenting the Questions Involved”’.

SPECIFICATION OF ERRORS RELIED UPON.

1. The opinion of the Court of Appeals is in error

in holding that the extrajudicial statements of peti-

tioner were properly admitted into evidence and in

effect overruling the case of Fenwick v. United States,

supra.

2. The opinion of the Court of Appeals is in error

in holding that the corpus delicti could be estalished

SPS Oe (ES Ee ~ Ke ee COU Rtew ters mar EE OP Py re wet SR Stree +e yet

4

by extrajudicial declarations, confessions or admis-

sions of the petitioner.

3. The opinion of the Ceurt of Appeals is in error

in holding that the burden of proof in a net worth

ease is not on respondent to clearly and accurately

establish by competent evidence the petitioner’s net

worth as of January 1, 194.

4. The opinion of the Court of Appeals, is in error

in holding that it is not ineambent upon the respond-

ent to produce evidence that excludes all possible avail-

able sources of taxable income from which the in-

creased net worth and the excess expenditures could

have been derived.

5. The opinion of the Court of Appeals is in error

in holding that there was a substantial understatement

of petitioner’s income (rely:ng simply upon the testi-

mony of one witness that she (Jerry Robinson) had

given petitioner 300-400 dollars for favors).

a

ARGUMENT.

From a reading of the testimony in its entirety in

this case it can readily be seen that the respondent

attempted to prove that the petitioner failed to report

all of his taxable income by what is known as the net

worth theory. That is, the respondent attempted to

establish the petitioner’s net worth as of December

31, 1943 and then to establis) his net worth at the end

of the years 1944, 1945 and 1946. Respondent then

26

subtracted the total of petitioner’s net worth from the

amount of income reported for the years in question

and thus attempted to arrive at his taxable income.

The respondent did not take into account the fact that

petitioner had a net worth of some $5,300.00 at the

time of his marriage in 1938 nor did it take into

account the fact that he had received a gift in the

sum of $5,000.00 from his mother, some three or four

years prior to the start of the investigation of this

case. The respondent has also attempted to reduce the

net worth of the petitioner by one thousand dollars by

valuing the electric trains in question in this case at

$500.00 whereas petitioner had told it that they were

worth some $1,500.00 on December 31, 1943. Respond-

ent also in its computations disregarded the fact that

the petitioner had received a gift of $5,000.00 from

his mother. Assuming this to be true this would of

course reduce the petitioner’s net worth so far as tax-

able income is concerned by that amount.

It will also be noted at this time that the respond-

ent’s original computations made by its agent, Mr.

Brady, also assume that the petitioner had paid some

$7,150.00 for his home and that said payment was

made in the year 1946 whereas the evidence developed

that the payment was not made until January 7 of

1947. This of course would again reduce the net worth

of the petitioner for the year 1946 by that amount.

The original computation of agent Brady made for

the respondent was also based on the fact that the

petitioner filed a joint return. It is to be noted that

27

the testimony in this case established that the peti-

tioner was married during the years in question and

that if he so desired he could have filed a separate

return and that if he had done so and been given

credit for the corrections which should have been

made, his total tax due the respondent for the three

years in question would have been $344.32, that is it

would have been one-half of the $688.64 which agent

Brady testified would have been the total deficiency

for his wife and himself for the three years in ques-

tion (R. Tr. p. 229, line 19 to p. 232, line 3). In other

words the amount of the deficiency would certainly not

have been substantial and therefore would not have

supported a conviction in this case. It is well estab-

lished that respondent must prove that a substantial

portion of the tax which it alleges to be due the Gov-

ernment was knowingly and wilfully defeated and

vaded by the petitioner.

Gleckman v. U.S., 85 Fed. (2d) 394;

Tinkoff v. U.S., 86 Fed. (2d) 868.

The only witness that the respondent called to tes-

tify that certain payments were made to the petitioner

that were not reported by the petitioner was one Jerry

Robinson. Her testimony was simply to the effect that

she had given the petitioner a Christmas present or

two (R. Tr. p. 34, lines 19-25) ; that she had no inde-

pendent recollection of the amount of money that

she gave to the petitioner as a present but she just

imagined or assumed that she had given petitioner

approximately $50.00 as a Christmas present in each

2s

of the three vears in question (RL Tr. p. 36, lines 12

IN; po 37, lines 28). Mes. Robinson alse testitied that

she might have given the petitioner a small present on

one o¢euston When she had been drinking and he had

befriended her. Lt is from the testimony of this one

Witness that the respondent has tried to establish that

the petitioner received substantial amounts of income

which he did not repert during the years in question,

A reading of the testimony of the witness Robinsen in

its entirety we submit would lead any reasonable per:

sen te the conclusions that she did net give any large

or substantial sums te the petitioner and secondly any

sums that she gave te the petitioner were given not

for any particular service performed by the petitioner

but simply given in the nature of Christmas presents

whieh were se small that she, as a matter of fact, had

no independent recollection of the amounts she gave

petitioner, We subnut that the respondent is attempt- |

ing in this ease te conviet the petitioner not because

he had received any subsantial income whieh he did

not report but simply beeause he had reeeived a

Christmas present from a person who at one time

Was a prostitute,

We further subnut that the testimony of the witness

Robinson should be disregarded in its entirety as her

testimeny Was contradictory throughout and for the

further reason that she testified positively that) she

had ne independent recollection of giving the peti-

toner any sums of money CR. Tr. p. 37, lines 2-8),

w

The only testimony of any consequence against the

petitioner in this ease was that of the internal reve-

nue agents, Thurman and Davis. ‘This testimony was

introduced over the objection of the petitioner. We

submit that the faets and circumstances surrounding

the conviction of the petitioner ino this ease fall

squarely within the rule applying to net werth eases

as set forth in the ease of US. 0. Fenwick. CCA, 7

Cireuit, Nov. 4, IMO, 177 Bed. (2d) 488. Tn the Ben

wick ease one Helen dF. BPeuwick was convieted in the

United States District Court, Southern Distriet of

Indiana, of income tax evasion for the years 1943 and

IMs. At the trial the Government offered no evidence

other than a uet worth expenditures” balance sheet

to show the evasion of income taxes. The Court says,

pages 489 and 490;

“Cho 2) Tn sueh a situation we must keep in

mind that the convietion ean net stand unless

there is proof of the corpus delieti, existence of

Whieh can net be presumed or established by any

extrajudicial admission, The government must,

by competent evidence, prove bevend reasonable

doubt that the ertme charged has actually been

committed. Pines v. United States, 8 Cir, 123 FB,

2d S25, S29; Forte vo United States, 69 App. D.C,

Tht, Sb BL 2d 256, a, TT ALR, 1120; GQordiner

v. United States, 8 Cir, 2ab FL 98lo, 912; United

States v. Chapman, 7 Cir, 16S BL 2d 997 at pave

WOOT, Tn the latter ease we said: ‘Appellant eon

tends that, “In a ‘net worth ease.” the starting

point must be based upon a solid foundation and

a Revenue Agent's statement of the defendant's

: |

oral admission or confession when uncorroborated

is not sufficient to convict.’’ We fully agree with

his statement of the law.’ In other words to jus-

tify the conviction, there must be proof beyond

reasonable doubt and exclusive of any express or

implied extrajudicial admission by defendant,

that defendant evaded some income tax. Gleck-

man v. United States, 8 Cir., 80 F. 2d 394, 399;

United States v. Miro, 2 Cir., 60 F. 2d 58, 61;

O’Brien v. United States, 7 Cir., 51 F. 2d 193,

196. Inasmuch as there is no direct proof that

defendant received income which he did not re-

port, we must test the validity of his conviction

by the rules enunciated in the cases cited to de-

termine whether there is such proof of increase in

net worth, irrespective of defendant’s implied ad-

missions out of court, as to justify a finding of

guilt. Such proof, circumstantial in character, in

view of the principles announced, must be such as

will exclude every reasonable hypothesis except

that of guilt. Evidence of mere probability of

guilt, of course, is not sufficient.’’

The Court then proceeded to review the evidence in

that case and showed that the Government’s informa-

tion as to beginning net worth was based entirely

upon an examination of defendant’s ‘‘cancelled checks,

bank statements and miscellaneous memoranda’’. The

Court says, on pages 490 and 491:

**(3) The weakness of the government’s posi-

tion, stressed by defendant, is the uncertainty of

the propriety of the finding of defendant’s net

worth at the beginning of 1943. Of course, before

31

the increased net worth method of proof is effec-

tive, the net worth of the taxpayer at the begin-

ning of the tax year must be clearly and accu-

rately established by competent evidence. Bryan

v. United States, 5 Cir., 175 F. 2d 223; United

States v. Chapman, 7 Cir., 168 F. 2d 997, 1001;

United States v. Skidmore, 7 Cir., 123 F. 2d 604,

608. By this rule we must test the sufficiency of

the evidence offered by the government to estab-

lish defendant’s net worth at the beginning of

1943.

= * * * * * *

““* * * the evidence falls far short of proof that

the property which the government agents as-

sumed constituted all of defendant’s net worth

at the beginning of 1943, was in fact all of the

property then owned by him. * * *

**(4) As we have said, when the government

relies upon the circumstances of increased net

worth and expenditures in excess of reported in-

come to establish income tax evasion it must pro-

duce evidence that excludes all possible available

sources of taxable income from which the in-

creased net worth and the excess expenditures

could have been derived. Thus in Bryan v. United

States, 5 Cir., 175 F. 2d 223, 225, the court said:

‘The net worth expenditures method of establish-

ing net income, sought to be applied in this case,

is effective only if the computations of net worth

at the beginning and at the end of the questioned

periods can reasonably be accepted as accurate.

Since * * * no claim of evasion is based upon the

deductions from gross income reported by the

Defendant, and since there is no evidence that

32

the gross expenditures by the Defendant in any

year were made entirely from gross income of the

business operations in such year, it was essential

for the Government to present evidence that ex-

» eluded, or tended to exclude, all other available

sources from which the additional funds expended

could have been derived. If the Defendant cor-

rectly reported his gross income, then a very sub-

stantial part of the expenditures was obliged to

have been made from funds other than such cur-

rent income and from sources not covered by the

returns or the records of the Defendant or in-

cluded by the Government’s computation of net

worth. * * * the Government must rely almost

entirely upon circumstantial evidence, that is to

Say, upon the circumstance of the expenditure of

considerably more money in the years in question

than the Defendant took in * * *. The evidence,

being circumstantial, must exclude every reason-

able hypothesis other than the guilt of the de-

fendant. * * * the case should not have been sub-

mitted to the jury since it did not exclude the

hypothesis that the funds used in making some of

the expenditures might have been from sources

other than current business income.’ This sup-

ports the decision of this court in United States

v. Chapman, 7 Cir., 168 F. 2d 997, 1001.”’

In this case, agent Brady proceeded to go right down

the list of all assets and liabilities stated in his bal-

ance sheet, and excepting where the petitioner had

stipulated to facts, the figures were based wholly upon

hearsay.

33

In United States v. Fenwick (C.C.A. 7th Cir., Nov.

4, 1949), 177 F. (2d) 488, discussed supra, the Court

further said on page 492:

‘‘Remembering that the government has the

burden of proof in a criminal case, that the

burden never shifts to defendant, that cireum-

stantial evidence must be of such character as to

exclude every reasonably hypothesis except that

of guilt, it necessarily follows that, when the gov-

ernment relies upon circumstances of increased

net worth and expenditures in excess of reported

income to establish income tax evasion, the basic

net worth must be established. The defendant is

not compelled to take the witness stand; he is not

compelled to make proof that he is innocent, but

he must be proved guilty by the evidence beyond

all reasonable doubt, and where there is uncer-

tainty as to whether all the assets of defendant

are included in the government’s computation of

net worth, it follows that its computations can not

be relied on. Essential proof of no other assets is

the cornerstone of the evidence of the govern-

ment; that cornerstone being faulty, the whole

edifice is so weakened as to be undependable as

proof of guilt beyond all reasonable doubt.”’

It is also to be noted that the record in this case

does not indicate that the respondent attempted to or

did prove that the petitioner’s books were inadequate.

The records disclose that the petitioner kept all rec-

ords that a man in his position, to-wit, chief of police,

would ordinarily keep, that is his bank accounts and a

record of any financial dealings which he might have

entered into such as purchase of an automobile or a

34

home. The Court instructed the jury in this regard

as follows:

‘“‘The income tax law provides that the net in-

come of the taxpayer shall be computed upon the

basis of the taxpayer’s annual accounting period,

in accordance with the method of accounting regu-

larly employed in keeping the books of the tax-

payer; but if no such method of accounting has

been employed or if the method employed does

not clearly reflect the income, a computation shall

be made upon such basis and in such manner as,

in the opinion of the Commissioner, does fairly

reflect the income.

The Government is authorized by law, when the

books are found to be inadequate, to adopt a rea-

sonable method of ascertaining income. And so in

this case it has undertaken to find out what the

defendant was worth at the beginning of the year

and what he was worth at the end of the year, so

as to show what he had accumulated as income in

the meantime.

If, at the end of the year, a man has in his pos-

session more property than he had at the begin-

ning of the year, it goes without saying that he

got it from some place; and, unless he got it by

gift or inheritance or loan, it would seem that he

got it by earning it, and that it was part of his

income.

Charge of the Court in United States v. Flac-

ecomio, D. D. Md.”’

We submit that the respondent did not establish

that the books of the petitioner were so inadequate

that they were unable to determine his net income and

35

for that reason the respondent was not entitled to

rely upon the net worth theory. It is obvious that if

the respondent had evidence to the effect that the

petitioner’s income was substantially greater than that

reported that it would have subpoenaed the records

and all the persons who had contributed to his in-

come. This it failed to do.

The corpus delicti had not been established at the

time of the admission of the extrajudicial statements

of petitioner. The Court of Appeals has in effect held

that the corpus delicti was established in this case by

the testimony of Jerry Robinson. We submit that the

corpus delicti was not proven by her testimony nor

did her testimony tend to establish the corpus delicti

as she was unable to testify positively that she gave

the petitioner any money for services rendered and

further she could not definitely testify with any exact-

ness that she gave the petitioner any sums of money in

any of the years in question. In the case of Pines v.

United States, supra, in holding the corpus delicti had

not been established the Court states as follows:

‘This, being the corpus delicti, could not be pre-

sumed, nor could it be established by extra-judi-

cial declaration, confession or admission of the

defendant. Tingle v. United States, 8 Cir., 38 F.

2d 573; Ryan v. United States, 8 Cir., 99 F. 2d

864; Gulotta v. United States, 8 Cir., 113 F. 2d

683. The evidence shows that defendant admitted

to peace officers that he had possession of the

securities in Minneapolis in November, 1939, and

that he borrowed an automobile from a Minne-

apolis party. It appears from the evidence that

Le AIL HOE is MRR OA ERE AI A FEI TT ID

36

he had the automobile and the securities in his

possession in Council Bluffs, Iowa, in November,

1939. Had there been evidence independent of

defendant’s admission that he had possession of

these securities in Minneapolis, this would have

been sufficient corroborative evidence that he

transported or caused to be transported the in-

struments from Minneapolis to Council Bluffs.

Bruce v. United States, 8 Cir., 73 F. 2d 972; Ben-

nett v. United States, 70 App. D.C. 76, 104 F. 2d

209. There was here, however, no evidence save

his own admission that he had possession of these

securities in Minneapolis, Minnesota, and there is

therefore lacking a vital link in the chain of cir-

cumstances by which it is sought to establish the

transportation in interstate commerce. The corpus

delicti includes not only the body or substance of

the crime, but also the criminal means by which

it was committed. The corroboration is not suffi-

cient if it tends only to support the admission.

It must embrace substantial evidence of the corpus

delicti, though it need not in itself be sufficient

proof of guilt. Forte v. United States, 68 App.

D.C. 111, 94 F. 2d 236, 244, 127 A.L.R. 1120;

Gulotta v. United States, supra.’’

In Gulotta v. United States (C.C.A. 8th Cir., July

24, 1940), 113 F. (2d) 683, the defendant was con-

victed of falsely swearing that he was a citizen of the

United States. A conviction was based upon an

affidavit of registration in which the defendant swore

that he had been born in Louisiana in 1896 and was

a citizen and also a written statement. by the defend-

ant before an agent of the Government in which he

37

declared that he had been born in Italy in March

1896 of Italian parents and in which he also admitted

that he fraudulently represented himself to be a

citizen of the United States. The Court held, on page

685, that extrajudicial admissions or confessions were

not sufficient to authorize a conviction of crime unless

corroborated by independent evidence of the corpus

delicti (citing cases) ; that independent evidence need

not be of itself sufficient proof of guilt but need only

be a substantial showing which together with the ad-

mission establishes guilt beyond a reasonable doubt.

The Court goes on to say, page 686:

‘But the rule requires some such independent

evidence, and it is conceded by the government

that the record is barren of all such extrinsic

evidence in this ease, unless a distinction be made

between confessions and admissions.”’

In Nicola v. United States (C.C.A. 3d Cir., Aug. 9,

1934), 72 F. (2d) 780, the defendant was convicted

of income tax evasion. A corporation mostly owned

by the defendant had sold certain patents to another

corporation, and a third corporation, the Point Im-

provement Company, of which the defendant was

president, had been paid a commission on this sale.

The commission was returned by the Point Improve-

ment Company as income and an income tax paid

thereon. The tax payable by Nicola would have been

higher and it was the contention of the Government

that the defendant had falsely and fraudulently used

the device of the corporation to save the difference

between the higher and the lower return. The cir-

38

cumstantial evidence upon which the case was per-

mitted to go to the jury in the Nicola case was not

dissimilar to the cireumstantial evidence upon which

the prosecution relies in this ease. In reversing the

verdict and judgment of conviction and holding that

the evidence was insufficient to justify a conviction,

the Cireuit Court of Appeals, said, on page 786:

***Unless there is substantial evidence of facts

which exclude every other hypothesis but that of

guilt, it is the duty of the trial court to instruct

the jury to return a verdict for the accused; and

where all the substantial evidence is as consistent

with innocence as with guilt, it is the duty of the

appellate court to reverse a judgment of convie-

tion.” Union Pacifie Coal Co. v. United States,

173 F. 737, 740 (C.C.A. 8); Wiener v. United

States, 282 F. 799, 801 (C.C.A. 3); Yusem vy.

United States, 8 F. (2d) 6 (C.C.A. 3); Ridenous

v. United States, 14 F. (2d) 888 (C.C.A. 3).”

It is clear from a reading of the Court of Appeals’

opinion in this case that there is a conflict in the

decisions of the various circuit courts of appeals. As

a matter of fact the respondent in its reply brief

which was filed with the United States Court of Ap-

peals in this case recognizes this fact. The respondent

quoted the following language from the Fenwick v.

United States, supra, case:

“* * * the conviction cannot stand unless there

is proof of the corpus delieti, existence of which

cannot be presumed or established by an extra-

judicial admission. The government must, by

competent evidence, prove beyond veasonable

doubt that the crime charged has actually been

39

committed. * * * In otier words to justify the

conviction, there must beproof beyond reasonable

doubt and exclusive of any express or implied

extrajudicial admission hy defendant, that de-

fendant evaded some itmome tax. Gleckman vy.

United States, 8 Cir., 8 F. 2d 394, 399; United

States v. Miro, 2 Cir., 60F, 2d 58, 61; O’Brien v.

United States, 7 Cir., 51 9, 2d 193, 196. Inasmuch

as there is no direct proo, that defendant received

income which he did notreport, we must test the

validity of his convietionby the rules enunciated

in the cases cited to debrmine whether there is

such proof of increase it net worth, irrespective

of defendant's implied idmissions out of court,

as to justify a finding of guilt. Such proof, cir-

cumstantial in character,in view of the principles

announced, must be sue as will exclude every

reasonable hypothesis ¢xcept that of guilt.”

(Italics supplied.)

and then stated as follows:

“It is submitted that the above proposition of

law is not supported by -he authorities cited and

should not be followed by this court. As was

stated by the court in the case of Bell v. United

States, 185 F. (2d) 302,309 (C.A. 4th):

‘The defendant relies principally upon Bryan

v. ULS., 5 Cir, 175 F. 2d 223, and U.S. v. Fen-

wick, 7 Cir, 177 F. 21 488, in both of which

it was held that evicence based on the net

worth theory was insuficient to support a con-

viction of attempting fraudulently to evade the

income tax, since the government's case did

not exclude the reasorable possibility that the

defendant had other assets at the beginning

of the period than those shown by the gov-

40

ernment’s statement; and the court directed

a verdict saying that the evidence, being cir-

cumstantial, must exclude every reasonable hy-

pothesis except that of the defendant’s guilt.

But we cannot follow these decisions since it is

obvious that they are based upon their par-

ticular facts and they do not relieve us from

the duty of appraising the sufficiency of the

evidence in the case before us. That responsi-

bility does not include a finding as to whether

the defendant is guilty beyond a reasonable

doubt.’ (Italics supplied.)

‘The Fenwick case, 177 F. (2d) 488 (C.A. 7th),

in holding that the Government must establish

proof of specific unreported income as a prereq-

uisite to the use of a net worth method of proof

of unreported income or, in the alternative, to

prove a negative or to refute all possible specula-

tion as to the source of appellant’s funds asserted

by the Government to prove appellant’s net

worth, departs from a well established line of

authority both prior and subsequent to the de-

cision in that case.

Gariepy v. United States, 189 F. (2d) 459, 463

(C.A. 6th) ;

Bell v. United States, 185 F. (2d) 302, 308 (C.A.

4th) ;

Jelaza v. United States, 179 F. (2d) 202, 204

(C.A. 4th) ;

United States v. Hornstein, 176 F. (2d) 217, 220

(C.A. 7th) ;

Schuermann v. United States, 174 F. (2d) 397, 399

(C.A. 8th).”’

The Circuit Court of Appeals in its decision in

this case also recognized the conflict in the cases in

41

the various Circuits as it recognizes the fact that

the Fenwick v. United States case, supra, appears

to be in conflict with Hornstein v. United States,

176 F. (2d) 717 (Cir. 7) and U. S. v. Yeoman-

Henderson, Inc., 193 F. (2d) 867 (Cir. 7).

We respectfully submit that this petition should

he granted for the following reasons:

1. That there is no substantial evidence in the

record in this case (if petitioner’s statement is ex-

cluded) from which a court or jury could find or

infer that petitioner had received substantial income

in excess of that which he reported in his income

tax returns for years 1944, 1945 and 1946.

2. We submit that the respondent did not bring

its case within the net worth theory for the reason

that it did not establish a solid net worth beginning

nor did it produce evidence that excluded all possible

available sources of taxable income from which the

increased net worth and the excess expenditures (if

any) could have been derived.

3. We submit that there is a distinct conflict in the

decisions of the various Circuit Courts of Appeals

throughout the United States regarding the ques-

tions presented by this petition.

Dated, Sacramento, California,

September 15, 1952.

Respectfully submitted,

A. M. Mutt, Jr.,

Attorney for Petitioner.