Opposition Brief — Cenedella v. United States

Inthe Supreme Court of the Winited States

OcToBER TERM, 1955

No. 429

ALFRED B, CENEDELLA, PETITIONER

Vv.

Unirep States of AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FIRST

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the Court of Appeals (Pet. 15-24)

is reported at 224 F. 2d 778.

JURISDICTION

The judgment of the Court of Appeals was en-

tered on August 5, 1955. A petition for rehearing

was denied on August 31, 1955. (Pet. 2.) The peti-

tion for certiorari was filed on September 28, 1955.

The jurisdiction of this Court is invoked under

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

(1)

»)

—

QUESTIONS PRESENTED

1. Whether evidence indicating that petitioner

had taken certain fees from the Coceavelli estate

under a claim of right constituted an inadmissible

collateral attack upon the decree of the probate

court allowing the administrator’s final account.

2. Whether the trial court should have in-

structed the jury that receipts from embezzlement

do not constitute taxable income.

3. Whether the trial court improperly hurried

the verdict by inquiring in open court, after the

jury had deliberated eleven hours, whether there

was prospect of an early verdict and whether the

jury desired additional instructions.

STATUTE AND RULE INVOLVED

Internal Revenue Code of 1939:

Sec. 145. PENALTIES.

* * * * *

(b) Failure to Collect and Pay Over Tax,

or Attempt to Defeat or Evade Tax.—Any

person required under this chapter to collect,

account for, and pay over any tax imposed by

this chapter, who willfully fails to collect or

truthfully account for and.pay over such tax,

and any person who willfully attempts in any

manner to evade or defeat any tax imposed by

this chapter or the payment thereof, shall, in

addition to other penalties provided by law, be

guilty of a felony and, upon conviction thereof,

be fined not more than $10,000, or imprisoned

3

for not more than five years, or both, together

with the costs of prosecution.

* * * * *

(26 U.S. C. 1952 ed., See. 145.)

Federal Rules of Criminal Procedure:

Rv te 30. Instructions.

At the close of the evidence or at such earlier

time during the trial as the court reasonably

directs, any party may file written requests

that the court instruct the jury on the law as

set forth in the requests. At the same time

copies of such requests shall be furnished to

adverse parties. The court shall inform coun-

sel of its proposed action upon the requests

prior to their arguments to the jury, but the

court shall instruct the jury after the argu-

ments are completed. No party may assign as

error any portion of the charge or omission

therefrom unless he objects thereto before the

jury retires to consider its verdict, stating dis-

tinctly the matter to which he objects and the

grounds of his objection. Opportunity shall

be given to make the objection out of the hear-

ing of the jury.

STATEMENT

On January 14, 1954, an indictment in four

counts was returned against petitioner in the

United States District Court for the District of

Massachusetts charging him with wilful attempted

evasion of his income tax and that of his wife for

BI.

Fooe ee 3 PORE EEE

4

each of the years 1947 to 1950, inclusive, in viola-

tion of Section 145(b) of the Internal Revenue

Code of 1939, (R. 1, 5-7) The following deficien-

cies were alleged in the indictment (R. 5-7) :'

Reported Corrected

Year Income Tax Income Tax

| CAA rane $6,373.26 $1,137.20 $17,879.20 $5,357.62

Ae 5,581.57 737. 86 11,008.37 1,852.16

DR ca eg ada 7,369.23 1,083.96 20,861.83 4,505.22

Meher rane ee eee 8,086.87 1,273.96 13,025.27 2,401.86

After a jury trial petitioner was found guilty as

charged. (R. 462.) On February 21, 1955, he was

sentenced to imprisonment for a period of four

months on each count, the terms of imprisonment

to run concurrently, and to pay a fine of $500 on

each count, the fines to be cumulative. (R. 475-

476.) The Court of Appeals affirmed. (Pet. 15-24.)

The evidence to support the verdict may be sum-

marized as follows:

Petitioner has practiced law in the town of Mil-

ford, Massachusetts, since 1910. He has been ac-

tive in civic affairs throughout his professional

life. He served on the local school committee for

over 20 years. He was town solicitor for Milford

for five years and for the adjoining town of Men-

don for about 25 years. He served on the Massa-

chusetts Industrial Accident Board from 1930 until

1935. Thereafter he was first assistant to the dis-

trict attorney of Worcester County until 1946 in

which year he was elected district attorney. He

served as district attorney of Worcester County

until 1954. (R. 337-338.)

' Petitioner and his wife filed joint returns for the years

involved,

=

Petitioner did not keep an accurate and complete

record of his income from his law practice. His

records consisted principally of diaries in which

he recorded certain fees, bank statements, deposit

slips, cancelled checks and check book stubs. (R.

423.) Petitioner’s checking account was used for

both business and personal transactions, and he

commingled his own funds in the account with

those of his clients. (R. 342-343, 428-429.) He

admitted at the trial that many items of income

were not recorded in his diaries or reported in his

tax returns, and that his net income as reported

for each of the years involved was understated in

a substantial amount. (R. 417-421, 575-590.) Cer-

tain items representing unreported income in each

year were agreed upon in a series of stipulations

between counsel. (R. 16, 253.) Certain other

items, which the Government alleged represented

unreported income from fees, were disputed in

whole or in part by petitioner (R. 575-590), and

the Government undertook to prove the disputed

items by documentary evidence and the testimony

of witnesses. One of the disputed items concerned

cash and stock which petitioner received in 1947

from the Estate of Vincenzo Coccavelli.

Petitioner was appointed guardian of Vincenzo

Coccavelli, an insane person, in 1920 (R. 62) and

served in that capacity until Coceavelli’s death.

Coccavelli died intestate on August 20, 1946, sur-

vived by four heirs who resided in Italy. The heirs

appointed petitioner their attorney in fact. On

October 10, 1946, petitioner’s son, then a law stu-

dent, was appointed administrator of the estate.

6

(R. 78.) Petitioner acted as attorney for the ad-

ministrator (R. 400) and handled all of the trans-

actions involving the estate (R. 402). A separate

checking account for the estate was opened in the

name of A. B. Cenedella, Jr., Administrator, on

January 16, 1947. (R. 106.) The assets of the

estate, consisting of cash and securities, had a value

of approximately $35,000, (R. 136, 559.)

At various times during 1947, petitioner ad-

mittedly received stock and cash of the Coceavelli

estate, of a value of over $9,000, which he did not

remit to the heirs. Stock of the Home National

Bank of Milford was transferred to petitioner, at

his direction, by the administrator. (R. 106, 407.)

The stock was included in the inventory of the

estate at a value of $1,610. (R. 353, 465.) On the

date of the transfer, it had a value of approxi-

mately $2,300. (R. 325.) Petitioner also acquired

the proceeds of various checks which totaled $7,327.

Four checks totaling $2,150 were issued to peti-

tioner by the administrator and were deposited by

petitioner in his bank account. (R. 403-407.) A

check in the amount of $1,500 payable to petitioner

as guardian and drawn against a Coccavelli

guardianship bank account was deposited in peti-

tioner’s account by his secretary. (R. 404.) <A

check in the amount of $3,177, which was made

payable to petitioner by a brokerage firm, repre-

senting the proceeds of the sale of bonds belonging

to the estate, was deposited by petitioner in his

account. (R. 405.) At petitioner’s direction his

secretary withdrew $500 from a Coccavelli guard-

GOLIST TET ER ROD OME LY Poh PN ME LENG GES, PDL AMOTEA ead ath hae AAPOR I GF ALLEL AIR APATITE

_—

7

ianship bank account and deposited the sum in his

account. (R. 81, 407.)

On February 16, 1948, petitioner forwarded to

the heirs in Italy, by check drawn on his personal

account, the sum of $318.29 as a distribution of the

estate. (R. 416, 557.) Petitioner made the follow-

ing notation on the check stub: ‘‘In full Coceavelli

Est.”’ (R. 558.) Petitioner admitted at the trial

that at the time the check was drawn he thought

the sum remitted was in full payment of the

amount due the heirs. (R. 416.) He also admitted

that he used the cash which he received from the

estate for his own purposes. (R. 408.) In addi-

tion, petitioner conceded that the estate was ‘*sub-

stantially closed’’ in the year 1948. (Pet. 3.)

The administrator did not file any accounting in

the Coccavelli estate, and petitioner did not make

any further distribution to the heirs until approxi-

mately ten months after the indictment. On No-

vember 24, 1954, the administrator filed a first and

final account in the probate court of Worcester

County. The account was allowed on the day it

was filed at the request of the petitioner as attor-

ney in fact for the heirs. (R. 462-463.) Among

other things, the account stated a payment to peti-

tioner on July 17, 1947, in the amount of $1,610

(Home National Bank stock), for fees and ex-

penses; a payment to petitioner’s son on October

29, 1947, in the amount of $2,000 as the adminis-

trator’s fee; and a distribution to petitioner for

the heirs on February 16, 1948, in the amount of

$5,725.26. (R. 465.)

PSE OLE IMIR RAY Ne

ee Te ee

8

No distribution to petitioner for the heirs of

$5,725.26 was in fact made on the date shown in

the account. (R. 414.) This sum was part of the

estate funds which petitioner acquired in 1947.

(R. 403-407, 414.) Petitioner did not actually dis-

tribute it to the heirs until December, 1954. (R.

414-415.)

Petitioner contended at the trial that his fee as

attorney for the administrator was $1,500 and his

expenses $110 (R. 352); that the Home National

Bank stock was transferred to him at the inventory

value ($1,610) in payment of his fee and expenses

(R. 349, 465); that his son’s fee as administrator

was received by him in repayment of a loan (R.

353); that the balance of the estate funds in his

hands, over $5,700, was deposited in his bank aec-

count and spent by him through inadvertence and

innocent error; and that the mistake was not dis-

covered until after he was indicted (R. 356-357,

405-406, 416-417). He objected to the introduction

of any evidence relating to the Coccavelli estate,

except the first and final account of the administra-

tor, on two grounds: First, that the amount of his

fee and expenses as stated in the account was con-

clusive in this proceeding and the decree of the

probate court allowing the account could not be

-eollaterally attacked ; and, secondly, that the Gov-

ernment could not establish that he held funds of

the estate (other than his fee and that of his son)

under a claim of right because he was at all times

under a definite unconditional obligation to repay

the money. (R. 63-78.)

FeO FROWN PNG UN YER A ATRIA NPD RLS ORLY FS TW IR TG Ry OG LRG PALE TD 4 See iC mmc i

9

At petitioner’s request, the trial court held a pre-

liminary hearing on the admissibility of the Cocca-

velli evidence. At the conclusion of the hearing,

the court ruled that the evidence was admissible

under the Government’s theory that from it the

jury could infer that in 1947 petitioner intention-

ally retained the money, in addition to the stock,

as compensation for his services as counsel for the

administrator and attorney in fact for the heirs.

(R. 63-78.)

The jury received the case and retired to consider

its verdict at about 10:00 A. M. At 9:00 P. M., the

same day, the court recalled the jury to the court-

room wheréupon, in the presence of petitioner and

counsel for both sides, the following colloquy

ensued (R. 460):

The Court: Mr. Foreman, I take it that

there is no prospect of your agreeing within

the next five or 10 minutes?

The Foremen: Well, I wouldn't qualify it

as to five or 10 minutes, your Honor.

The Court: I thought that, at least counsel

and I thought—I suggested it and they agreed

that possibly I might say a few general words

to vou, and then I will ask you whether there is

some specific thing you would like to be told

ahout.

One hundred and five vears ago there was a

very famous Judge here in Massachusetts

who found himself in the position we find our-

selves in this evening, where a jury had been

out a long time and couldn’t agree, and he said

10

quite a lot to the jury, which has been sort of

a bible in this situation, and it happens; it is

not unique. I’m not going to read all of it but

I will read some because it is phrased much

better than I ever could phrase it.

The court then read to the jury an excerpt ap-

proved by the Supreme Judicial Court of Massa-

chusetts in Commonwealth v. Tuey, 8 Cushing 1

(R. 460-461), at the conclusion of which the follow-

ing took place (R. 461-462) :

Now, Mr. Foreman, if there is anything in

my charge that you would like to have re-

peated, if there is any subject on which you

would like further illumination from the

charge or if there is any evidence you would

like to hear, I will hand you a pad and you

may address any questions to me that you wish,

being not just the decision of one of you as to

the questions but you should confer briefly

among yourselves so that you agree as to what

it is that I am being asked.

The Foreman: Right here, your Honor ?

The Court: Yes, you may. If you prefer to

go upstairs and do it, you may do that.

The Foreman: I don’t think that will be

necessary, your Honor.

[Conference between jurors. }

The Foreman: I feel, your Honor, that we

are reasonably close to a decision, a verdict.

The Court: That is fine. That was why I

brought you down, to find out whether you

11

were or were not. We will await you, and

naturally you may take as long as you feel you

should. If you do change your mind and want

any questions answered, why, we will be here.

The Foreman: Thank you.

The jury retired for further deliberations at 9:03

P. M. It returned to the court room at 9:20 P. M.

with a verdict of guilty on all counts of the indict-

ment. (R. 462.)

ARGUMENT

1. Petitioner’s argument that the decree of the

probate court of Worcester County, entered in

1954, is conclusive here as to the amount of fees

which petitioner claimed in 1947 in connection with

the Coccavelli matter, and that it was prejudicial

error for the trial court to admit evidence at vari-

ance with the facts set forth therein, is without

merit.

The trial court, after a preliminary hearing,

ruled that the Coceavelli evidence was adn:issible

under the Goverment’s theory that from it the jury

could infer that in 1947 petitioner consciously re-

tained the Coccavelli estate money in payment for

services rendered as counsel for the administrator

and as attorney in fact for the heirs. (R. 68-78.)

The issue thus raised was whether in 1947 peti-

tioner retained the Coccavelli money under a claim

of right and with no restrictions as to its use. If

so, and there was ample evidence to support such

a finding, it was taxable income to petitioner in

1947. North American Oil v. Burnet, 286 U.S.

417: United States v. Lewis, 340 U.S. 590. As was

——

‘a

pointed out by the court below (Pet. 20), the de-

cree of the probate court dees not adjudicate or

attempt to adjudicate the issue of federal law in-

volved herein.”

it should be noted also that the evidence as to

the Coccavelli estate related to only a part of the

unreported income for the year 1947,* and that the

evilence as to the counts covering the years 1948,

1949 and 1950 is unchallenged.

2. Petitioner also contends, with respect to the

Coccavelli matter, that the failure of the trial court

to instruct the jury on the proposition declared by

this Court in Commissioner v. Wilcox, 327 U. 8. |

404, was prejudicial error. This contention is like-

wise without merit. Petitioner not only failed to

request the court to instruct the jury on the rule

of the Wilcox case (R. 440-447), but he earnestly

requested the court not to give any instructions

based thereon (R. 473). He may not now com-

plain that he was prejudiced by the omission. Rule

30, supra, p. 3.

Furthermore, it is clear from the record that the

rule of the Wilcox case is not applicable here. As

stated above, the Government took the position

that petitioner retained the Coccavelli funds under

12

* Furthermore, it is obvious that if petitioner retained all or

part of the money as compensation for his services as attor-

ney in fact for the heirs the amount so retained would not

be reflected in the accounting filed in the probate court. That

court had no jurisdiction over petitioner’s fee as attorney in

fact for the heirs.

* Petitioner’s net income as reported for 1947 was $6,373.26

(R. 19); he admitted at the trial that his correct net income

was $8,680.95. (R. 575-576.)

13

a ‘‘claim of right’’, whereas petitioner contended

throughout the trial (and on appeal) that the funds

were retained by him through inadvertence and

mistake. At no time did the Government inject the

element of embezzlement into the case, and peti-

tioner’s assertions to the contrary (Pet. 10) are

without support in the record. Moreover, the in-

structions of the trial court on the Coecavelli evi-

dence (R. 453-454) were in complete harmony with

the respective positions of the parties as stated at

the trial.

3. Finally, petitioner contends that when the

jury was recalled to the court room after deliberat-

ing eleven hours, the court’s remarks, although

proper on the ‘‘surface’’ (Pet. 11), had the effect of

exerting pressure upon the jury to return a verdict

in haste. The record of the proceedings attendant

upon the recall of the jury (R. 460-462) clearly

demonstrates the lack of substance in this con-

tention.

The court in recalling the jury scrupulously

adhered to its obligation to exercise extreme care

and caution in order to preserve petitioner’s rights.

It did not inquire, either expressly or by impli-

cation, as to the posture of the jury. Compare

Burton v. United States, 196 U. S. 283, and Bras-

field v. United States, 272 U. S. 448, which are

relied upon by petitioner. On the assumption that

the jury was not then on the verge of a verdict, the

court read to the jury (R. 460-461) an abstract

from Commonwealth v. Tuey, 8 Cushing 1, which

was approved by the Supreme Judicial Court of

Massachusetts and by this Court. Allen v. United

——

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14

States, 164 U.S. 492. It then inquired if the jury

desired any further instructions. The court con-

cluded its remarks by reminding the jury that

‘‘naturally you may take as long as you feel you

should.’’ (R. 461-462.)

Petitioner, himself an attorney, and his counsel

were present when the jury was recalled and they

registered no objection to the proceedings at that

time. Nor were the proceedings now complained

of designated as a ground in petitioner’s motion

for a new trial. (R. 467-468.) It is apparent that

the claim of coercion is an afterthought. See Allis

v. United States, 155 U. 8. 117.

CONCLUSION

The decision of the court below is clearly correct.

The petition for a writ of certiorari presents no

question warranting further review and should be

denied.

Respectfully submitted,

Simon E. SoBe.orr,

Solicitor General.

H. Brian Houianp,

Assistant Attorney General.

JosEPH M. Howarp,

JoHN J. McGaRVEY,

Attorneys.

OcToBER, 1955.

WY U. S. GOVERNMENT PRINTING OFFICE: 1955 364443

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