Petition for Writ of Certiorari — McClanahan v. United States (No. 386)

guprene COURT. iste Pr

In the

Supreme Court of the United States

OCTOBER TERM, 1961

F. L. MCCLANAHAN,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

a

IRVING L. GOLDBERG,

2232 Republic National Bank

Building,

Dallas 1, Texas,

Attorney for Petitioner.

Of Counsel:

WILLIAM P. FONVILLE,

ai 2232 Republic National Bank Building,

Dallas i, Texas.

WARLICK LAW, INC.—2263 VALDINA STREET—DALLAS—RiI 1-671!

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INDEX

Page

Opinion Below , | 1

Jurisdiction | | 2

Question Presented a 2

Statement of the Case. ) sie eee 2-8

Reasons for Granting the Writ . 8-12

Conclusion rag ty coal eae ie Be : 14

Proof of Service | | EB oe 14

Appendix

Opinion Below | | ties 15

Judgment Below 5 one aay ee ee 30

Order Denying Petition for Rehearing. | 31

Order Staying Mandate nn... i ae

\n

ii Index of Authorities

Page

Federal Rules of Criminal Procedure, Rule 52 (b) 13

Quercia v. United States, 289 U. S. 466, 53 S. Ct. 698,

77 L. Ed. 1321. | 9,11

Sullivan v. United States, 1 176 F. 2d 723 9,10

United States v. Meltzer, CCA 7, 100 F. 2d 739 12

United States v. Murdock, 290 U. S. 389, 54 S. Ct. 223,

78 L. Ed. 381... 9,11

M

In the

Supreme Court of the United States

OCTOBER TERM, 1961

No.

F. L. MCCLANAHAN,

R Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

F’. L. McClanahan, hereinafter called petitioner, prays that

a writ of certiorari issue to review the judgment of -the

United States Court of Appeals for the Fifth Circuit, entered

in the above entitled cause on July 7, 1961, on which timely

filed petition for rehearing was denied by that court on

August 10, 1961.

OPINION BELOW

The opinion of the Court of Appeals (Infra Appendix) is

not yet reported. =

2

JURISDICTION

The judgment of the Court of Appeals was dated and

entered on July 7, 1961 (R. p. 334, Appendix p. 30).

The Court of Appeals, on August 10, 1961, entered an

order denying petitioner’s timely filed petition for rehearing

(R. p. 358, Appendix p. 31). —

The jurisdiction of this court is invoked under the pro-

visions of 28 U.S. C. Section 1254(1) ;

QUESTION PRESENTED

Whether in a criminal prosecution on an indictment con-

taining one count charging willful attempted evasion of

income tax for one year in which there is evidence from which

a lack of willful intent may reasonably be drawn, the court

may in its instructions to the jury, without referring to or

analyzing for the jury the evidence favorable to the accused

on the issue of willful intent, state to the jury “In determining

the guilt of the defendant the wilfullness of the act becomes

apparent.”

STATEMENT OF THE CASE

Petitioner, an oil man and compulsive gambler (R. pp. 198-

199), was prosecuted upon an indictment containing one

count charging him with willful attempted evasion of in-

come tax for the fiscal year ended March 31, 1951 (R. pp.

4-5). The prosecution’s case proceeded upon the theory that

net gambling winnings of $49,225.00 had been willfully

omitted by petitioner from his joint Federal income tax

3

return for that fiscal year (R. pp. 123-124). That income

tax return reported net community income for the year of

$51,947.91 and reflected net income before depletion and de-

preciation, and including capital gains. of $99,372.28 (R. pp.

13-32). The return reported no gambling winnings or gam-

bling losses (R. pp. 13-32). The prosecution introduced checks

purporting to represent petitioner’s winnings on football

wagering in the aggregate of $97,525.00 and checks which it

conceded represented losses by petitioner at such wagering in

the aggregate of $48,300.00, or net winnings of $49,225.00

(R. pp. 33-37, 46-48, 81-82, 96, 120-125). Checks purporting

to represent winnings were made payable to L. C. Mclanahan

and Sam F. Smith (R. pp. 34 A, 46-47). The prosecution

introduced an oral statement made by petitioner to the in-

vestigating special agent that he had not deposited his gam-

bling winnings in his bank account because the Internal

Revenue would charge his gamblit.g winnings to him as in-

come (R. p. 91;. The investigating special agents testified

that as early as in 1952 and 1953 the petitioner had stated

to them that he had won at football wagering in the fiscal

year ended March 31,'1951, but that he had lost more than

such winnings in gambling at Las Vegas, Nevada at six

named gambling houses at the race track (R. pp. 77, 92, 113,

116). The investigating special agent in charge of the case

testified that no effort to follow up such leads and no investi-

gation of such leads had been made (R. pp. 111-118).

Petitioner testified that he made it a practice to withdraw

funds from his business bank account and place such funds

in currency in his bank lock Lox; that he did this in order to

4

keep his bank balance low for the reason that another had

unlimited authority to draw on his bank account (R. pp. 162,

204-205). Petitioner testified that he had stopped depositing

his gambling winnings in his bank account because the Gov-

ernment would accept his deposits as winnings but would nc

allow his losses unless he had an affidavit or documentary

evidence to identify the loss (R. pp. 206-207) ; that it was

not his purpose to conceal his income from the Government or

to evade tax on it (R. p. 207) ; that he could keep track of his

net winnings in that way (R. pp. 212-214). Petitioner testi-

fied that he had requested checks paying winnings to be made

payable to “Sam F. Smith” in order to be able to r2gotiate

the checks in payment of his gambling losses to others who

did not want to accept checks bearing his correct name be-

cause of his prominence (R. pp. 205-206, 224).

Petitioner testified that in September of 1950 he withdrew

$75,000.00 in currency from his lock box and deposited it with

Harold Hind, credit manager of the Last Frontier Hotel in

Las Vegas, Nevada, for use in gambling in Las Vegas; that

he thereafter made trips to Las Vegas until March 30, 1951,

the day he was married; that when he lost at gambiing at the

Last Frontier he would advise Hind; that he was well known

at Las Vegas and when he gambled at other places than the

Last Frontier he gambled on credit and when he lost he would

write an order to the house on the Last Frontier and the

house would take the order to Hind at the Last Frontier, who

would pay it; that when he won he would deposit the winnings

with Hind; that when he finally drew out vne balance of his

deposit on March 30, 1951, he had $3,000.00; that the differ-

5

ence of $52,000.00 represented net loss by him in gambling

at Las Vegas in that period (R. pp. 201-203, 218).

Harold Hind, credit manager of the Last Frontier Hotel in

Las Vegas it. 1950 and 1951, testified to the deposit of the

fun: with him at the Last Frontier; that he had paid losses

of the petitioner at the Last Frontier in the period September,

1950 to March 30, 1951 in the amount of $25,000.00 from the

deposit and had paid losses of petitioner to othe: gambling

houses at Las Vegas on orders of the petitioner from the

deposit in the amount of at least $50,000.00 and that at the

end of the period when petitioner drew down the balance of

the fund there was $3,000.00 left in it (R. pp. 184-188,

191-193, 194-196, 197).

Petitioner testified that at the time he filed his joint Fed-

eral income tax return for the fiscal year ended March 31,

1951, he had been advised by his tax accountants, : 2d so

understood, that if his gambling losses exceeded his gambling

winnings he was not required to report gambling transactions

in his income tax returns that; accordingly, he did not report

any gambling transactions in his return for that fiscal year

because his losses had exceeded his winnings for the year

(R. pp. 208-209).

Petitioner’s tax accountant testified that he had advised

petitioner that if his gambling transactions in the taxable

year resulted in a net gambling loss no gambling transactions

were required to be reported in the return (R. pp. 152-153).

- Petitioner was shown to have had a good reputation for

truth, veracity, honesty and integrity in 1951 (R. pp. 139-

147).

6

Petitioner had cash withdrawals from his business in the

three fiscal years ended March 31, 1951, exclusive of income

tax payments and personal living expenses to have more than

covered the claimed losses in excess of winnings (R. pp. 163-

166).

In its instructions to the jury the court def:ned willful

intent as follows:

“The attempt to evade and defeat the tax must be a

willful attempt, that is to say, it must be made with

intent to keep from the government a tax imposed by

law, which it was the duty of the defendant to pay to

the government. The attempt must be willful, that is in-

tentionally done with the intent that the government

should be defrauded of the tax due from the defend-

ant.” (R. p. 249.)

And again,

“An essential element in the offenses charged in this

case is the element of specific intent involving bad pur-

pose and evil motive. Unless you are satisfied from the

evidence beyond a reasonable doubt that the defendant

evaded taxes deliberately and with the specific inten-

tion of defrauding the government of taxes, the offenses

charged have not been establishec and the defendant is

entitled to acquittal, notwithstanding the evidence may

satisfy you that the defendant may have understated

the facts.” (R. p. 256.)

In its instruction the court instructed the jury:

“In determining the guilt of the defendant, the will-

fulness of the act becomes apparent. When an act is

willfully done it may not always be proved by direct

evidence; it may often be inferred from the conduct of

the parties, taking into consideration that the normal

mind must realize the probable consequences of his act.

7

Willfulness may be inferred by the doing or saying of

those things designed to bring about and put into effect

or into course of operation an unlawful act. This may

be inferred from the direct evidence of the several acts

and general conduct of the parties. It may, likewise, be

gathered from the circumstances surrounding the acts

of the parties. These circumstances may be considered

along with any direct evidence.” (R. p. 250.)

This wae inadvertent. The manuscript of the charge from

which the judge read had the word “important” instead of

“apparent”, as read by the court (R. pp. 259-260).

The court did not anywhere in his charge point out to the

jury or call its attention to or analyze for the jury the evi-

dence favorable to the accused on the issue of willful intent

(R. pp. 246-259).

The court instructed the jury that if during the trial or

from the charge it had received any impression as to how the

court felt about the case or the nature of the verdict that

should be rendered the jury should disregard such impres-

sion, for the reason that the court was the judge of the law

only and the jurors were the judges of the facts (R. p. 252).

At the conclusion of the charge, after the jury had retired,

the court called for exceptions from the defendant. Peti-

tioner’s counsel, in stating petitioner’s exceptions to the

charge, called the court’s attention to the erroneous use of

the word “apparent”, stating that he had taken the charge

in shorthand and had recorded the word “apparent’’. The

court stated that he thought he had used the word “impor-

tant”, the way it was written in the manuscript, and took

no action on the matter. At the conclusion of the exception

8

by the defendant, the court said he would let the charge

stand (R. pp. 259-260, 262).

During its deliberations the manuscript of the court’s

charge was sent in to the jury (R. p. 284).

The jury returned a verdict of guilty and the defendant

was thereupon sentenced to serve a term of 13 months in the

penitentiary and to pay a fine of $10,000.00 (R. pp. 263-

265). ee:

On appeal the Court of Appeals stated that counsel had left

with the court below the impression that he was satisfied

with the judge’s belief that he had used the right word, and

thus waived any criticism that might have been available

if he had made it clear that he disagreed with the judge’s

understanding and that, moreover, the instruction that “In

determining the guilt of the defendant the willfulness of the

act becomes apparent” did not constitute prejudicial error,

and affirmed the judgment (Appendix, pp. 19-20, 29, R. pp.

5-6, 334). Petitioner filed a timely petition for rehearing,

which was denied (R. pp. 335-357, 358).

The basis for Federal jurisdiction in the court of first

instance was, under Title 18, U. S. C. 3231, a crimjnal prose-

cution for violation of Section 145(b) of the Internal Reve-

nue Code of 1939.

REASONS FOR GRANTING THE WRIT

The decision of the court below should be reviewed for the

reason that it erroneously authorizes a district court, in a

criminal prosecution in which specific willful intent is a vital

9

and essential element of the offense, on disputed facts from

which an inference of a lack of willful intent may reasonably

be drawn, without pointing out to the jury or analyzing for

its benefit the evidence favorable to the accused on that issue,

to instruct the jury that “In determining the guilt of the

defendant the willfulness of the act becomes apparent”. This

decision is in conflict with the decisioh of the Court of Ap-

peals for the District of Columbia in Sullivan v. United

States, 176 F. 2d 723. It is opposed in principle to the hold-

ings of this court in Quercia v. United States, 289 U.S. 466,

53'S. Ct698, 77 L. Ed. 1321, and United States v. M urdock,

290 U. S. 389, 54 S. Ct. 223, 78 L. Ed. 881, And if it can

be said that the holdings of this court in Quercia and Mur-

dock, supra, do not proscribe a one-sided instruction or com-

ment by a trial court to a jury in a criminal prosecution on

disputed facts to the effect that the essential element of

willful intent is established, clear, or apparent, then the

holding below erroneously decides an.-important question of

Federal criminal procedure which has not been but should

be settled by this court.

In this case petitioner ir: respect of incriminating admis-

sions to the investigating agent testified to explanations con-

sistent with a lack of tax evasion purpose. Petitioner ad-

mitted that he had net winnings of $50,000.00 at football

wagering in the year but testified, as he had stated to the

agents in the earliest stages of the investigation, that he had

suffered gambling losses in an even larger amount in gam-

bling in the casinos at Las Vegas. Petitioner was corrobo-

10

rated in such losses by the testimony of a disinterested wit-

ness. No gambling transactions were reported in petitioner’s

income tax return for the year. However, petitioner testified

that he had been advised by his tax accountant, and so

understood, that if his gambling losses exceeded his gambling

winnings for the taxable year no gambling transactions were

required to be reported in the return and, for this reason,

having suffered a net gambling loss, he had omitted all gam-

bling transactions from his return. Petitioner was corrobo-

rated in his understanding by the testimony of his tax

accountant, who testified that he had so advised petitioner.

On these facts it cannot be said that an inference of lack of

willful intent to evade tax might not reasonably have been

drawn. :

In Sullivan v. United States, 178 F. 2d 723, the Court of

Appeals for the District of Columbia, in respect of a charge

similar in content and circumstance to the one involved here,

for which it reversed the trial court, hela:

“* * * As intent was the vital issue the statement was

tantamount to expressing the court’s judgment that the

defendant was guilty.

“The expression of such an opinion goes beyond the

privilege of a judge to comment fairly upon the facts.

Comment upon the evidence must be distinguished from

expression of an opinion upon an ultimate issue deter-

minative of guilt or innocence. The ill effect cannot be

offset by instructing the jurors that the court’s opinion

is not binding on them and that they are the sole judges

of the facts. * * * We think * * * that such statements

have little, if any, tendericy to undo the harm already

done, The influence of che trial judge on the jury is

of great weight and his sightest word or intimation is

11

received with deference and may prove controlling.

Quercia v. TI. S. 1933, 289 U. S. 466, 470, 53 S. Ct.

698, 77 L. Ed. 1321. That is especially so in a criminal

trial. The damaging influence is more likely where con-

flicting evidence on a crucial issue leaves the outcome

close, as it might have been in this case. * * *”

In Quercia v. United States, 289 U. S. 466, 470, 53 S. Ct.

698, 77 L. Ed. 1321, this court, recognizing the right of the

trial court to comment upon the evidence in a trial by jury,

reiterated it to be the duty of the trial judge to use great

care that an expression of opinion upon the evidence should

be so given as not to mislead and especially that it should not

be one-sided. In United States v. Murdock, 290 U. S. 389,

54 S. Ct. 223, 78 L. Ed. 381, this court, reversing for a

charge in which the trial court advised the jury that he felt

that on the evidence in the case the Government had sus-

tained its burden beyond a reasonable doubt, held that, al-

though the power of a judge to express ar opinion as to the

guilt of the defendant exists, it should be exercised cautiously

and only in exceptional cases. A case involving an essential

element of willful intent in which on disputed facts an infer-

ence of a lack of such intent may reasonably be drawn is

obviously not such an exceptional case.

In the case here, as well as in the Sullivan case, supra,

the trial court instructed the jury that they were not bound

by his opinion and were the triers of the facts. As the court

observed in the Sullivan case, such admonitions can hardly

serve to cure the harm done by the court’s comment.

This is an important question of Federal criminal pro-

cedure. The Sixth Amendment of the Constitution, U.S.C. A.

12

Const. Amend. 6, provides that in all criminal prosecutions,

the accused shall enjoy the right to a speedy public trial, by

an impartial jury. The expression of an opinion by the trial

judge upon the merits of the case and upon an essential issue

which the jury is to determine is plainly an abridgement of

that right and the damage cannot be overcome by admonish- —

ing the jury that they are not. bound by it, but notwithstand-

ing such opinion, it is their duty to form their own opinion

from the facts and law in the case. This is especially true in

a criminal case where the judge expresses his opinion that

the defendant is guilty of the offense charged. Such pro-

cedure is productive of the following situation: Government’s

counsel] says to the jury, “The evidence presented proves the

defendant’s guilt”; defendant’s counsel says, “The evidence

is insufficient to establish such guilt,” and the judge says,

“My opinion coincides with that of the Government. I like-

wise give it to you as my opinion that he is guilty. How any

defendant could have a fair and impartial trial after such a

proceeding is incomprehensible. Under such circumstances

the right of trial by jury becomes an idle and useless cere-

mony. The verdict is not their independent judgment but

represents a judgment altered and modified to conform to

the court’s desire in the matter.*

The court below stated that petitioner’s counsel had waived

any criticism of the error of the court in this charge in that,

after calling the court’s attention to the inadvertent, but

eggregious error in the use of the word “apparent”, counsel

*Paraphrase from the opinion of Judge Major in United States v.

Meltzer, CCA 7, 100 F. 2d 739, concurring in the result with whose views

Judge Treanor, also concurring in the result, joined.

13

did not argue with the court after he stated that he thought

he had said it “important.” The Coirt of Appeals stated that

counsel clearly left the court with the impression that it was

satisfied with the judge’s belief that he had used the right

word. The statement of the judge that the word was wriiten

“important” and that he thought he said it that way was not

a conversational suggestion of a difference of a point of view,

but a firm statement of the court’s judgment as to what he

had said, which admitted of no argument. There was certainly

no intention to waive criticism of the charge. It was made

clear to the court that counsel had taken the charge in short-

hand as it was spoken and had recorded the word “apparent”.

The function of exception is to call error to the court’s atten-

tion to the end that the court, if it sees fit, can correct the

error. This was certainly done. The court ruled that he

would let the charge stand as it was. Assuming arguendo that

petitioner’s counsel left the impression that he was satisfied

with the court’s belief that he used the right word, this would

not cure the error. The jury heard spoken from the bench

with the imprimatur of that high office “In determining the

guilt of the defendant the willfulness of the act becomes

apparent”. Whatever the court thought he had said, that is

what the jury heard him say. This was highly prejudicial

error, however inadvertent, and even if it had not been called

to the attention of the court, it would constitute error to be

noticed under Rule 52(b) Federal Rules of Criminal Pro-

cedure as plain error affecting substantial rights of the

defendant, not brought to the attention of the court.

14

CONCLUSION

The petition for the writ of certiorari should be granted for

the reasons stated above.

Respectfully submitted,

IRVING L. GOLDBERG,

2232 Republic National Bank

Building,

Dallas 1, Texas,

Attorney for Petitioner.

Of Counsel:

WILLIAM P. FONVILLE,

2232 Republic National Bank Building,

Dallas 1, Texas.

PROOF OF SERVICE

I, Irving L. Goldberg, attorney for the petitioner herein,

and a member of the Bar of the Supreme Court of the United

States, hereby certify that on the VA day of September,

1961, I served copies of the foregoing petition for writ of

certiorari on the Respondent United States of America by

mailing copies in a duly addressed envelope, with first-class

air mail postage prepaid, to the Solicitor General of the

United States, Department of Justice, Washington 25, D. C.,

and by mailing a copy in a duly addressed envelope with

first-class postage prepaid to the United States Attorney for

the Northern District of Texas, United States Courthouse,

Fort Worth, Texas.

Dal As 1, Texas,

Attorney for Petitioner,

F. L. McClanahan.

15

APPENDIX

In the ’

UNITED STATES COURT OF APPEALS

No. 18665

F. L. MeCLANAHAN,

Appellant,

versus

UNITED STATES OF AMERICA,

Appellee.

Appeal from the United States District Court for the

Northern District of Texas.

(July 7, 1961.)

Before TUTTLE, Chief Judge, and CAMERON and

JONES, Circuit Judges.

TUTTLE, Chief Judge: This is the second appeal from

a conviction of appellant of the charge of wilfully attempt-

ing to evade and defeat a part of the income tax owing by

him for the fiscal year ending March 31, 1951, in violation

of Section 145(b), Internal Revenue Code of 1939.

16 ]

The first three grounds of — criticize parts of ‘the

trial court’s charge to the jury; the next four attack the

sufficiency of the evidence to warrant submission of the

case to the jury and/or to sustain its verdict; two other

grounds of appeal deal with the admission of evidence of

an earlier omission of gambling income from appellant’s

income tax returns; the remaining three grounds are based

on 2 criticism of parts of the oral argument of government

counsel to the jury.

It was the government’s contention, amply supported by

proof, that the appellant had made gambling winnings of

approximately $50,000, none of which was shown on his

income tax return and which appellant had taken consider-

able effort to conceal.

Appellant, while conceding that he had such winnings,

contended that he had suffered gambling losses of more

than the amount of his winnings and that he was, there-

fore, under no duty to report the winnings. The government

concedes that only the excess of gambling winnings over

gambling losses represents taxable income. It does not con-

cede, however, that there was no affirmative duty for the

taxpayer to report his winnings as income and then claim

his losses as deductions.

We dispose, first, of the grounds touching on the suffici-

ency of the evidence. In the first appearance of a case

involving McClanahan’s conviction for a 1951 income tax

violation we held that the evidence was sufficient to sustain

a verdict of guilt. McClanahan v. United States, 5 Cir., 272

F. 2d 663. The affirmative evidence presented on the pres-

ent trial made an equally strong case against the taxpayer.

17

Appellant complains that the government did not pursue

certain leads in an effort to substantiate his claim that he

Sustained large gambling losses at the racetracks and at a

half dozen or so different gambling establishments at Las

Vegas, Nevada. The simple answer to this contention is that

the government was under no duty to run down these leads

even if they had been specific enough to make such investi-

gation feasible. The burden of showing the losses was on the

defendant, once he admitted the existence of the winnings.

The appellant appears to draw from our earlier decision

following his first conviction that there was no duty of

appellant to report his gambling winnings unless they ex-

ceeded his losses. We find no basis for such view. This Court

has long since held that gambling winnings of the type here

involved are includable in gross income and that gambling

losses, to the extent permitted by statute, are deductions,

Humphrey v. Commissioner, 5 Cir., 162 F. 2d 853. They are

so denominated in Section 23(h) of the 1939 Internal Reve-

nue Code. Under the requiremenis of the gross income tax

section of the Code, Section 22, therefore, there is a duty

for a taxpayer to report his winnings. He may then, if

he wishes to take advantage of the statutory provision,

claim his gambling losses as deductions.' Thus, where it

was conceded that there were unreported gambling win-

nings, the goveriment was under no burden to prove that

there were no unclaimed deductions in order to carry its

burden of proof here.

1The Court of Civil Appeals for the First Circuit draws a distinction

between a gambler who, like McClanahan, makes his winnings and suf-

fers his losses in separate transactions and a “professional” gambler

who handles bets for others. It exnounds the same view as did this Court

so far as concerns individual gamblers. See Winkler v. United States, 1

Cir., 230 F. 2d 766.

18

We next consider the challenge to the court’s jury charge.

The criticism here is that the trial judge inadvertently

used the word “apparent” when he intended tc say “impor-

tant” in a part of his charge. The transcript of the charge,

as contained in the record, includes the following sentence:

“In determining the guilt of the defendant the wilfulness of

the act becomes appa~ent.” At the conclusion of the court’s

charge the following colloquy occurred:

“Mr. Fonville:

“* * * In reading the charge the Court said, in

determining the guilt of the defendant, as I under-

stood it, ‘The willfuliiess of the act becomes apparent’,

I either misunderstood the Court or the Court probably

said ‘apparent’ instead of ‘important’. Mine is in

shorthand. I will try to find the part of the charge in

which it appears.

“The Court:

“Is it in the requested charge?

“Mr. Fonville:

“No, it is in the main charge.

“The Court:

“Repeat it.

“Mr. Fonville:

“The sentence begins, ‘In determining the guilt of

the defendant’.

“The Court:

“All right.

“Mr. Fonville:

“It is not too far down in the charge, I would say

about. three or four pages.

19

“The Court:

“Yes, I have it, and it reads ‘In determining the

guilt of the defendant the willfulness of the act be-

comes important’.

“Mr. Fonville:

“As I got it the Court said ‘apparent’ rather than

important.

“The Court:

“Weil, it is written ‘important’, and I think I said

it that way.”

That is where the matter was left.

We agree with appellant that we must treat the matter

on the assumption that the charge said “apparent” rather

than “important.” The United States does not take a con-

trary position. What it does say, though, and we think cor-

rectly, is that here there was no clear request by counsel

that the court eerrect che charge. Counsel clearly left the

court with the impression that he was satisfied with the

judge’s belief that he had used the right word. Counsel thus

waived any criticism that might have been available to

him if he had made it clear to the court that he disagreed

with the judge’s understanding.

Moreover, while the word “apparent” would not be cer-

rect in the challenged sentence, we think the subsequent

parts of the charge adequately protected the accused. Appel-

lant contends that the sentence, including the word “appar-

ent,” amounted to an expression by the court of its opinion

that wilfulness had been pruved. Assuming that contention

to be correct, we do not think this would be prejudicial .

20

error. It has been frequently stated that a trial judge may

express his opinion of the facts if it is made clear to the

jury that they are the triers of the facts and that they are

not bound by his opinion, Lott v. United States, 5 Cir., 230

F. 2d 915, 918, cert. denied, 351 U.S. 953, rehearing den.

352 U.S. 860; Kansas City Star Co. v. United States, 8 Cir.,

240 F. 2d 648, 644, cert. denied 354 U.S. 923.

Here the court repeatedly told the jury that before they

could find a verdict of guilty they would have to find a

wilful intent. The court also instructed the jury:

“Another thing for you to bear in mind is that this

charge should be taken as a whole and do not ‘hang

your hat’ as it were, upon one point or peg without

giving due consideration to all the evidence before you

and all of the provisions of the charge. And if during

the trial, or from this charge, you have gathered any

impression as to how the Court feels about the case or

the nature of the verdict that should be rendered, you

will disregard that also, because the Court is the judge

of the law only and you as jurors are judges of the

facts.”

We think no reversible error occurred for the inadvertent

use of the word “apparent” by the court.

The next complaint about the charge is aimed at the

following language:

“So now, if you tind from the evidence and believe

beyond a reasonable doubt that the defendant did, about

the time stated in the indictment, file a tax return, as

alleged, in which he did willfully and knowingly attempt

to conceal the amount of his income and evade the pay-

ment of .axes thereon for the fiscal year ended March

31, 1951, as required by law, then, in that event, you

may find the defendant guilty.

21

“In this case, if it appears that the defendant filed an

income tax report setting forth a portion of his income,

and if you find and believe from the evidence beyond a

reasonable doubt that the defendant collected other sums

of money and knowingly and willfully failed to include

the same in the income tax reported and that his failure

or refusal to so include these items was done with the

intent of defeating in part the payment of the taxes due

by him to the government, this failure to mention such

sums would amount to concealment within the law.

“An income taxpayer is due to pay income tax on

winnings that he may have from gambling just as on

income from other sources. However, if in gambling he

loses money he may deduct his gambling losses from his

gambling winnings, but he may not deduct his gambling

losses from the legitimate income on which he would

otherwise pay tax.”

Appellant’s objection to this charge was:

“Now, the defendant objects to that portion of the

Court’s charge wherein the Court instructs the jury ia

this case (?f) it appears that the defendant filed an

income tax return setting forth a portion of his income

and if you find and believe from the evidence, beyond a

reasonable doubt that the defendant collected other sums

of money and willfully and knowingly failed to include

same in his income report, for the reason that that is not

a correct statement of the law, and you authorized the

jury in this case to find the defendant guilty by reason

of having collected some gambling winnings, even though

the losses exceed the winnings, because the Court says if

he collected the other sums of money and knowingly and

willfully failed to include the same in the income report ;

for the further reason that the law does not require

money collected to be included in an income tax report;

it requires only items of income.”

We think there is no merit in this contention. This charge

correctly stated that the failure to report other sums col-

lected would amount to concealment if such failure was

22

knowing and wilful and was done with the intent of defeat-

tng in part the payment of the taxes due by him. We have

already discussed above the duty of the taxpayer to report

his winnings as income. A knowing and wilful failure to

report such income, with the intent of defeating the pay-

ment of the taxes, would amount to concealment just as

charged by the court.

In this connection it should be noted that the earlier

judgment of this Court reversing a previous conviction was

based on an inadequate charge explaining that only the net

gains of winnings over losses constitute taxable income,

and particularly the Court felt that the appellant had been

prejudiced by the rather cryptic answer the trial judge

made, out of the presence of the defendant, to a written

inquiry from the jury touching on this matter. It is clear

from our opinion in the earlier case that we felt that such

answer practically amounted to a direction of a verdict of

guilty on the undisputed evidence that McClanahan had

unreported gambling gains. 272 F. 2d 663, 666.

The appellant next complains of that part of the jury’s

charge which said:

“The jury will not concern itself or undertake to

name the penalty in the event the defendant is found

guilty. This duty or responsibility under the law de-

volves upon the judge. He will in the nature and course

of events take into consideration the degree of wilful-

ness with which the act has been done. He will likewise

take into consideration any and all mitigating circum-

stances connected with the transaction. He will con-

sider the case both from the angles of justice and

mercy. The only question for the jury is one of guilt or

innocence.”

23

We think that the above language given in the ordinary

course of the judge’s complete charge, and not in response

te a special inquiry from the jury, would not be error. It

was part of his statement that the jury was not to be con-

cerned with the matter of punishment but that this was a

matter for the judge to consider in the event of a verdict

of guilty. The case is not like Demetree v. United States,

» Cir., 207 F. 2d 892. We think it more nearly resembles

the situation discussed by the Sixth Circuit in Strauch v.

United States, 6 Cir., 213 F.2d 805; vacated by the Supreme

Court on a different ground, 348 U.S. 905. See also Dicks

v. United States, 5 Cir., 253 F. 2d 713, 714, and Erwin v.

United States, 6 Cir., 242 F. 2d 336, 337.

We come next to the contention that the court erred in

admitting evidence, over counsel's objection, showing omis-

sion of gambling income “from a return for a year nine

years prior to the year involved in the charge on which

appellant was being tried.”

The record discloses that the testimony complained of

was that of a former internal revenue agent who was being

questioned by the government as to his efforts to obtain

from McClanahan records to substantiate his claimed gam-

bling losses. After having testified at some length about his

efforts to obtain such records, the witness testified, “I re-

minded Mr. McClanahan that as far back as 1942 and for

every year up to the years I was investigating in that he

had been asked by various special agents and revenue

agents to produce his gambling records, and that he had

produced none with the exception of a five day period in

24

1944. I asked him again for any records regarding the

three years I was investigating.”

Thereafter comes the testimony now objected to. The fol-

lowing colloquy took place:

“Q. Now, was there anything further said with refer-

ence to previous revenue agents with Mr. McClanahan—

first—did he acknowledge that that was a fact?

“A. Yes, sir, he did.

“Q. Did you discuss deficiencies which he had settled

for prior years on account of his gambling activities

with him at this meeting?

“A. Yes, I mentioned that his income tax return—

“Mr. Fonville: . &

“T object to this testimony. I object to this witness. “=

going into previous years. The witness is talking about ~

some tax payments that had been settled in prior years.

It will have no materiality in this case and it is preju-

dicial.

“Mr. Hamilton:

“I think it is very material in this case. I think this

witness has established that that very dispute was set-

tled in this very year, and it has to do with the man’s

system, motive, and intent.

“The Court:

“How remote was the former offense?

“Mr. Hamilton:

“It was not settled until the year in this indictment

and it covered the years 1942 through 1948.

“Mr. Fonville:

“And the Court understood from counsel that he was

referring to an offense because the Court said, ‘When

25

was the offense?’ There was no offense involved, accord-

ing to the witness. The witness said he had made some

adjustments and settlements.

“The Court:

“T used the word ‘offense’ when perhaps I might have

said transaction or occurrence, is what I had reference

to. I will let him answer.

“(By Mr. Hamilton) :

“Q. Did you discuss that with him?

“A. 7.

“Q. Did you discuss with him the fact that that had

just been settled in this year?

“A. Yes.

“Q. And what further discussion did you have with

him along that line?

“A. Just the fact that his returns, or rather the in-

vestigation of his returns resulted in a settlement where-

by some $50,000.00 additional gambling income was

agreed on by both sides for the year 1942.

“Q. I will ask you whether or not you asked him what

he did with his winnings during the period you were

investigating?

“A. Yes, I did. He said that he put them in his lock

box or else paid other gambling losses with them.

“The Court:

“Now, with reference to the lock box. Were you talk-

ing about that time or the former settlement in 1942, or

about the funds that are now under consideration?

“The Witness:

“About the funds under consideration.

26

“The Court:

“The case now before us?

“The Witness:

“Yes, sir.

“The Court:

“Go ahead.

“(By Mr. Hamilton) :

“Q. What did he say he did with his money?

“A. He put it in the safety deposit box in the First

National Bank in Dallas or paid losses with it.

“Q. Did he state whether or not he put it in his bank

account? .

“A. He did not put it there.

“Q. Did you ask him why he had not deposited this

money?

“A. He said he had not deposited it because the In-

ternal Revenue would charge his gambling winning up to

him as income.

“Q. Was anything stated with reference to his prior

deficiency in that regard, what it was based upon?

“A. The additional taxes for the prior period was

additional gambling income.

“Q. Do you know whether it was based on bank

records or not?

“A. Yes, it was based on identified gambling win-

nings that were put in the bank less identified checks

given for gambling.”

We think this is not similar to evidence tendered by the

government to show a similar failure to report income in a

27

—_

remote prior year such as was the case in Lloyd v. United

States, 5 Cir., 226 F. 2d 9. Here the testimony was of a wit-

ness telling of conversations and statements becween him and

the accused. In effect he stated that in an effort to get Mc-

Clanahan to furnish him specific information or records

touching on his claimed gambling losses, he reminded McClan-

ahan that he had just been made to pay a $50,000 deficiency

for an earlier year because of his failure to give adequate

information. Furthermore, McClanahan’s statement that for

the year in question he did not deposit his gambling winnings

in the bank “because the Internal Revenue would charge his

gambling winning up to him as income,” made it proper for

the government to show, as it did in the last part of the testi-

mony quoted above, that the additional assessment testified

to had been arrived at by taking McClanahan’s recorded bank

@eposits as proof of his winnings, giving him credit for “‘iden-

tified checks given for gambling’’ as a deduction. McClana-

han’s statement that he had not deposited his gambling win-

nings during the year in question but had rather put the

money in safety deposit boxes, was certainly admissible. It

was equally relevant for the government to prove that in

arriving at the deficiency McClanahan had given credit for

provable losses. We think, in short, that the testimony of the

witness as to his efforts to get McClanahan to disclose the:

facts concerning his gambling losses was admissible as throw-

ing light on appellant’s conduct, especially his failure to

produce evidence convincing to the jury-that he actually

suffered substantial losses. a

28

When McClanahan testified, he stated that the agents

“wouldn’t let me have any losses I had during those years,”

and that it was for this reason that he put his money in a lock

box. It was certainty relevant for the government to show

that credits were allowed for all “identified checks for gam-

bling.” Thus, even if the evidence had been inadmissible when

given, no harm is shown because the government could clearly

explain just how the deficiency was handled to rebut Mr.

McClanahan’s testimony.

We do not think reversible error occurred in the failure of

the trial court either to declare a mistria!, which was not

requested, or in not granting a new trial because of the prose-

cuting attorney’s statement during the course of the trial,

“This is not the first time; this is his second time. He didn’t

get prosecuted before but he is being prosecuted now.”

Counsel for appellant objected to this statement by saying,

“I object to that argument as being unfounded upon the evi-

dence in this case. There is nothing in this case that there is

former offense.” Whereupon, a government counsel stated,

“I will stipulate that there was no former offense.”’ The Court

then said, “Yes, I think we told the jury that after an objec-

tion made during the trial, so the instruction still stands.”

Counsel did not request the court to declare a mistrial nor

did he request any further clarification of the matter at the

—————-—

2This came up on questions on his direct testimony:

“Q. Now, Mr. Baskett testified something about having a conver-

sation with you and you said something about putting your money

into a lockbox. Tell the Court and jury what you said to Mr.

Baskett in that respect.

“A. I had told him since the government had charged me income

tax for the years 1942 through 1948 that I was now putting it ina

lock box, I would keep my records, since they wouldn’t let me have

my losses I had during those years.”

29

time. While it would have undoubtedly been better not to have

implied that the prior deficiency of $50,000, which we have

discussed above, might have resulted in a prior prosecution,

we do not think that the statement by counsel requires a

reversal of the judgment of conviction in the absence of a

motion for mistrial. We think it plain that the trial court

made it clear to the jury that there had been no previous

criminal offense charged against McClanahan.

The final point raised by appellant is that a witness for

the prosecution was permitted to testify that he had examined

records in Chicago which were not introduced into evidence

or available at the trial, and that he had found no other trans-

actions than the ones that had been admitted on stipulation.

We think this point is without substance since a witness may

clearly testify as to his failure to find the records after a

search. This, in fact, is frequently the only way in which a

negative fact can be proved. See Nichols v. United States, 5

Cir., 48 F. 2d 46, 49, and Keith v. United States, 5 Cir., 250

F. 2d 355, 356.

Finding no error, we conclude that the judgment must be

AFFIRMED.

CAMERON, Circuit Judge, I concur in the result.

30

JUDGMENT.

Extract from the Minutes of July 7, 1961

No. 18665

F. L. MCCLANAHAN

versus

UNITED STATES OF AMERICA

This cause came on to be heard on the transcript of the

record from the United States District Court for the North-

ern District of Texas, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment of the

said District Court in this cause be, and the same is hereby,

affirmed.

“Cameron, Circuit Judge, Concurs in the Result.”

* * * * *

31

[460] FILED

10th day of August, 1961

EDWARD W. WADSWORTH

Clerk of the United States Court of Appeals

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 18,665

F. L. McCLANHAN,

Appellant,

v.

UNITED STATES OF AMERICA,

Appellee.

Appeal from the United States District Court for the

Northern District of Texas

(August 10, 1961)

ON PETITION FOR REHEARING

Before TUTTLE, Chief Judge. CAMERON and JONES,

Circuit Judges.

PER CURIAM:

It is ORDERED that the petition for rehearing filed in

_ the above styled and numbered cause be, and the same is,

hereby DENIED.

OPINION DENYING REHEARING—

FILED AUGUST 10, 1961

32

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

/

No. 18665

F. L. MeCLANAHAN,

Appellant,

versus

UNITED STATES OF AMERICA,

a Appellee.

ON CONSIDERATION OF THE APPLICATION of the

appellant in the above numbered and entitled cause for a

stay of the mandate of this Court therein, to enable appel-

lant to apply for and to obtain a writ of certiorari from the:

Supreme Court of the United States, IT IS ORDERED that

the issue of the mandate of this Court in said cause be and

the sare is stayed for a period of thirty days from August

10, 1961; the stay to continue in force until the final dispo-

sition of the case by the Supreme Court, provided that within

thirty days from August 10, 1961 there shall be filed with

the Clerk of this Court the certificate of the Clerk of the

Supreme Court that certiorari petition and record have been

filed. It is further ordered that the Clerk shall issue the

mandate upon the filing of a copy of an order of the Supreme

33

Court denying the writ, or upon the expiration of thirty days

from August 10, 1961, unless the above-mentioned certifi-

cave shall be filed with the Clerk of this Court within that

time.

/s/ ELBERT P. TUTTLE

United States Circuit Judge.

(ORDER STAYING MANDATE, FILED: August 26,

1961)

Dated: