Brief for the Respondent in Opposition — Monarch Distributing Co. v. United States

Opinion below wepehuces

Jurisdiction “tata tis i a

Questions presented __ - Sahn

Statute involved F

Statement : wens

Argument i

Conclusion ae eo

CITATIONS

Cases:

Abrams v. United States, 250 U.S. 616 2

Brooks vy. United States, 267 U.S. 4382

Cannon v. United States, 116 U.S. 55

Claassen v. United States, 142 U.S. 140

Evans v. United States, 1538 U.S. 584 <a i

Hagner v. United States, 285 U.S. 427 .

Hewitt v. United States, 110 F. (2d) 1, certiorari denied,

310 U.S. 641 ak oe sd

Pierce v. United States, 252 U. 8. 239

Reg. v. Tolson, 23 Q. B. D. 168, 60 L. T. R. 899 (1889) -

Shaw v. United States, 292 Fed. 339 - pe

Stumbo yv. United States, 90 F. (2d) 828 ix

United States v. Balint, 258 U.S. 250 ~

Statutes:

Internal Revenue Code, See. 2857 (53 Stat. 1, 327; U. S.C.

Supp. V, Title 26, Sec. 2857)

U.S. C., Title 18, See. 390

(1)

2924741—41——-1

ee EP EPR TE PA SOC DAB ce GO “PP Tis Oh “em

Guthe Supreme Court of the Wnited States

OctoBER TERM, 1940

No. 704

MonakcH DistrisuTING CoMPANy, A CORPORATION,

AND JOSEPH S. MEYER, PETITIONERS

v.

THE UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES CIRCUIT COURT OF APPEALS FOR THE SEVENTH

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the Circuit Court of Appeals

(R. 495-501) is reported in 116 F. (2d) 11.

JURISDICTION

The judgment of the Circuit Court of Appeals

was entered December 5, 1940 (R. 501), and a peti-

tion for rehearing (R. 503-516) denied December

18, 1940 (R. 517). The petition for writ of certio-

rari was filed January 16, 1941. The jurisdiction

of this Court is invoked under Section 240 (a) of

(1)

RE WNE EP TMS FES ES DARI PMOL Fn OEP ESE

the Judicial Code, as amended by the Act of Feb-

ruary 13, 1925. See also Rule XI of the Criminal

Appeals Rules, promulgated by this Court May 7,

1934.

QUESTIONS PRESENTED

The petition for a writ of certiorari and

supplements thereto recite eleven questions pre-

sented, which seem to reduce themselves to two:

1. Whether Counts 1 and 6 of Indictment 15126

and Counts 1 to 3, inclusive, of Indictment 15129

are so deficient in substance as to be open to attack

for the first time in this Court.

2. Whether there was a complete failure of proof

to support petitioners’ convictions upon Count 1

or Count 6 of Indictment 15126.

STATUTE INVOLVED

Section 2857 of the Internal Revenue Code (53

Stat. 1, 327; U. S. C. Supp. V, Title 26, Sec. 2857)

provides in part:

(a) Requirements.—Every rectifier and

wholesale liquor dealer shall keep daily, at

his place of business covered by his special

tax stamp, a record of distilled spirits re-

ceived and disposed of by him, and shall

render under oath correct transcripts and

summaries of such records: * * * The

records shall be kept and the transcripts

shall be rendered in such form, and under

such rules and regulations as the Commis-

sioner [of Internal Revenue], with the ap-

proval of the Secretary [of the Treasury],

may prescribe.

* * * * *

3

Every rectifier and wholesale liquor

dealer who refuses or neglects to keep such

records in the form prescribed by the Com-

missioner, with the approval of the Secre-

tary, or to make entries therein, or cancels,

alters, or obliterates any entry therein (ex-

cept for the purpose of correcting errors)

or destroys any part of such records, or any

entry therein, or makes any false entry

therein,’ or hinders or obstructs any in-

ternal revenue officer from inspecting such

records or taking any abstracts therefrom,

or neglects or refuses to preserve or produce

such records as required by this chapter or

by regulations issued pursuant thereto,

shall pay a penalty of $100 and, on con-

viction, shall be fined not less than $100 nor

more than $5,000, and be imprisoned not

less than three months nor more than three

years.

* ox * * *

Ee a rec ee a eee

OLSEN EROS UF TTR RO INL WM MT RE 9 La

STATEMENT

Two indictments were returned in the United

States District Court for the Eastern District of

Illinois (Indictments 15126 and 15129). Indict-

ment 15126 (R. 2-26) involves both petitioners,

while Indictment 15129 (R. 29-42) involves peti-

tioner Monarch Distributing Company alone.

Indictment 15126 contains 12 counts, and In-

dictment 15129 seven counts. A jury being

The counts herein discussed are all predicated upon this

provision of the statute.

4

waived (R. 421), the District Judge tried the cases

and found both petitioners guilty under 11 of the

12 counts of Indictment 15126 (R. 423). Peti-

tioner Monarch Distributing Company was found

guilty under all counts of Indictment 15129

(R. 424). Petitioner Meyer was fined $1,000 and

sentenced to imprisonment for two years (R. 427-

428). Petitioner Monarch Distributing Company

was fined $2,500 upon each indictment. These

punishments were not allocated to any one count.

(R. 425-426, 429-430.)

The Cireuit Court of Appeals in affirming the

convictions considered only Counts 1 and 6 of In-

dictment 15126 and Counts 1 to 3, inclusive, of

Indictment 15129, the punishment imposed under

each indictment not being in excess of that which °

could be imposed under any one of the counts con-

sidered. Petitioner Monarch Distributing Com-

pany concedes the sufficiency of the evidence to

sustain its conviction under Counts 1 to 3, inelu-

sive, of Indictment 15129 (Pet. 14), but asserts

that those counts are fatally deficient (Supple-

ments to petition). Both petitioners challenge the

sufficiency of the evidence as to Counts 1 and 6 of

Indictment 15126, as well as the adequacy of those

counts.

Count 1 of Indictment 15,126 charged that the

petitioner Monarch Distributing Company, and

petitioner Meyer, and another, who had control

of the books and records of the corporation, made

ai a

5

a false entry in a certain record required to be

kept, known as Treasury Department Form 52A,

which record constituted a portion of the monthly

report of a wholesale liquor dealer. This entry

represented that certain alcoholic spirits were re-

ceived by the defendants from the F. J. Skye Dis-

tributing Company on July 22, 1939 (R. 132-133),

and the count alleged that the entry was false in

that the spirits were in fact received on July 20,

and was further false in that the entry was not

made on July 22, the date it purported to have

been made, but on July 24, the defendants well

knowing the entry to be false (R. 2-4).

The principal Government evidence relating to

Count 1 is as follows: The parties stipulated in the

District Court that the Skye Distributing Company

sold and delivered 41 cases of liquor to the Monarch

Company on July 20, 1939 (R. 342; Govt. Ex. 17,

R. 283), and Revenue Inspector Brendel testified

that he observed a Skye Distributing Company

truck unloading liquor at the Monarch Company on

the evening of July 20, and that petitioner Meyer

was present (R. 349). The parties stipulated that

a check was given in payment to the Skye truck

driver, Hameton [Hamilton] (R. 342). Hamilton

recalled an evening delivery to Monarch about that

time but could not recall the date, and testified that

Meyer gave him the check (R. 369).

Inspector Brendel checked the Monarch records

on July 21, on July 22, and at 10:00 A. M., July 24,

and found no entry of the receipt of this shipment.

ah lt ea i

6

Subsequent to that time the shipment was recorded

as having been received on July 22 (R. 132-133),

Brendel testified that when Meyer was asked on

July 21 whether any receipts or disposals remained

unrecorded, he replied there were none (R. 372),

Meyer testified that the shipment was received from

Skye Company on July 21, entry thereof being

made on July 24, under date of July 22 (R. 389).

On July 21 the Monarch Company made a sub-

stantial sale of liquor to one Melvin Thompson

which, as shown by a comparison of the Skye and

Thompson invoices, included numerous cases of

liquors that were received from the Skye Company

on July 20 (R. 373; Govt. Ex. 17, R. 283; Govt.

Ex. 58, R. 412-414).

Count 6 of Indictment 15126 charged that on

October 13, 1939, the Monarch Co., Meyer, then its

vice president, and another, made a false entry on

a record required to be kept, known as Treasury

Department Form 52 B, which record constituted a

portion of the monthly report of a wholesale liquor

dealer. The entry represented that certain alco-

holic spirits had been sent to Joe Nelson, whose

address was Leonard, Texas (R. 224-225), and the

count alleged that the entry was false in that the

shipment was not sent to Joe Nelson at Leonard,

Texas, but was in fact sent to one Joe Nelson

located at Kansas City, Missouri, the defendants

well knowing the entry to be false (R. 11-12).

The principal Government evidence with refer-

ence to Count 6 is as follows: On October 13, 1939,

‘

the Monarch Company sold, and recorded on its

Treasury Department Form 52B, asale of liquor to

Joe Nelson listing his address as Leonard, Texas

(R. 224-225, 281, 325).° The liquor was, however,

actually consigned C, O. D. via Riss & Co., a motor

vehicle common carrier, to Joe Nelson, Kansas City,

Missouri (R. 318-319). Riss & Co. employees

identified one Chester Tork as the man who paid

for and received the goods in Kansas City, identi-

fying himself as Joe Nelson (R. 344, 345, 347).

Inspector Brendel saw Chester Tork in Meyer’s

office on July 18, 1939, where Meyer and Tork were

closeted for about an hour (R. 343). There had

been numerous prior sales by Monarch to Joe

Nelson, Leonard, Texas (R. 265-282), and entries

of such sales on Treasury Form 52 B (R. 146, 150,

172, 178, 184, 192, 206, 210, 222), which had

come to Brendel’s attention (R. 343, 349, 370).

Revenue Inspector Grinn testified that he made

three trips to Leonard, Texas, which has a popu-

lation of about 1,300, that he interviewed the post-

master (who called in the rural carriers), the hotel

man, 6 of the 12 retail merchants, the City Mar-

shal, the Sheriff, and the Chief Deputy Sheriff, and

found that not one of them knew of Joe Nelson

(R. 348-349). On September 18, 1939, Brendel

told Meyer that investigators for the Aleohol Tax

Unit had been unable to locate a Joe Nelson in

* The invoice showed a sale of 38 cases (R. 281) ; the entry

recorded 35 cases.

292474—41——-2

8

Leonard, Texas, and that nothing was known of

him in Leonard or its vicinity (R. 374). Inspector

Carrier was present at the conversation and cor-

roborated Brendel’s testimony (R. 376). ‘he sale

of October 13, 1939, was, nevertheless, entered as a

sale to Joe Nelson, Leonard, Texas.

When the shipment to Nelson was seized in

Tork’s possession, the name of Joe Nelson, Leonard,

Texas, was not written or printed on any of the

cartons containing the liquor, nor were there any

marks of any kind on the cartons showing the con-

signee or destination (R. 416).°

Counts 1 to 3, inclusive, of Indictment 15,129

charged that on March 27, March 31, and June 30,

1939, respectively, petitioner Monarch Distributing

Company and others, not including petitioner

Meyer, made certain false entries on Form 52 B,

i. e., that certain described liquors had been sent to

Mike O’Brien, whose name or names and address

they had been sent to a person or persons other than

Mike O’Brien whose name or names and address

or addresses were unknown to the grand jurors

(R. 29-33). The sufficiency of the evidence to

sustain the conviction under these counts is not

challenged.

* U.S. C., Title 18, Section 390, makes it a crime to make

an interstate shipment of a package containing intoxicating

liquors unless the name of the consignee is plainly labeled

on the outside of the package.

9

ARGUMENT

I

RIEGEL CF

In supplements to their petition the petitioners

concededly urge for the first time that Counts 1 and

6 of Indictment 15,126 and Counts 1 to 3, inclusive,

of Indictment 15,129 are fatally defective because

the statute penalizes rectifiers and wholesale liquor

dealers who falsify their records of distilled spirits

received and disposed of, whereas the counts in

question fail to charge that the petitioners were

either rectifiers or wholesale liquor dealers or that

the spirits were distilled spirits.

Each count charged that the defendants made a

false entry in a record required to be kept by them,

which record constituted a portion ‘‘of the monthly

report of a wholesale liquor dealer.’’ Each also

refers specifically by line, page, and date to the

Treasury Department Form wherein the false entry

was recorded (R. 3, 11-12, 29-33). These forms

are entitled ‘*Wholesale-Liquor-Dealers Monthly

Report”? (see, e. g., R. 182-133). It 1s evident,

therefore, that the indictment sufficiently alleged

that the petitioners were wholesale liquor dealers.

Each count also describes the liquors received or

disposed of by the defendants as ‘‘alcoholie spirits”

(R. 3, 11-12, 29-33). This term is clearly broad

enough to embrace ‘‘distilled spirits.’ Moreover,

the forms to which reference is made in each count

specifically disclose that they refer only to ‘‘dis-

10

tilled spirits’’ received and disposed of (see, e. g.,

R. 132, 224, 225). Plainly the petitioners were

sufficiently advised that the spirits involved were

distilled spirits.

A comparable attack was rejected in Hewitt y.

United States, 110 F. (2d) 1 (C. C. A. 8th), certi-

orari denied, 310 U. 8S. 641, even upon demurrer.

In that case—decided by the court that rendered

the decision in Shaw v. United States, 292 Fed.

339, upon which the petitioners rely—the defend-

ants demurred to an indictment which charged

that a certain bank was a member of the Federal

Deposit Insurance Corporation, whereas it should

have charged that it was a bank the deposits of

which were insured by that corporation. The Cir-

cuit Court of Appeals held that the demurrer had

been properly overruled, since as a practical mat-

ter no one could have been in doubt as to what

was meant by the allegation that the bank was a

member of the Federal Deposit Insurance Cor-

poration. The court pointed out that under the

rule it announced in the Shaw case an indictment

is fatally defective only where there is the com-

plete omission of an essential element of the of-

fense sought to be charged.“

*In the Shaw case the indictment contained no allegation

which might reasonably have been construed as charging

that the bank in question was a member of the Federal

Reserve System (see 292 Fed. at p. 343).

14

A fortiori the attack upon the counts in question,

first made in this court, must fail. The petitioners

do not and eannot urge that they were surprised

or prejudiced by the asserted deficiences. The

records in which the alleged false entries were

made were introduced in evidence (R. 46-243) and,

as heretofore stated, they disclosed that they were

the records of wholesale liquor dealers and that

the spirits involved were distilled spirits. In Hag-

ner v. United States, 285 U. S. 427, 433, this Court

stated that ‘“‘Upon a proceeding after verdict at

least, no prejudice being shown, it is enough that

the necessary facts appear in any form, or by fair

construction ean be found within the terms of

the indictment.’’ See also Cannon v. United

States, 116 U. S. 55, 77; Stumbo v. United States,

90 F. (2d) 828, 832 (C. C. A. 6th).

II

Petitioners urge that the Circuit Court of Ap-

peals erred in upholding their convictions on In-

dictment 15,126 upon the basis of Counts 1 and 6,

because there was a complete failure of proof as

to those counts. Since either count will support

the sentences imposed, it follows that if there is

sufficient evidence as to either, the petitioners’ con-

victions may not be successfully attacked. Cf.

Brooks v. United States, 267 U. S. 482, 441; Pierce

v. United States, 252 U. S. 239, 252; Abrams v.

United States, 250 U. S. 616, 619; Evans v. United

*

rd

a

&

3

12

States, 153 U. S. 584, 607; Claassen v. United

States, 142 U. 8. 140.

(1) Count 1 charged that the petitioners made a

false entry on Treasury Department Form 52A in

that the entry represented that certain spirits were

received by them on July 22, 1939, whereas they

were in fact received on July 20.° There can be no

doubt under the evidence that the entry was false.

The liquor was recorded on Form 52A as having

been received on July 22 (R. 132-133). It was

stipulated by the parties in the District Court that

the petitioners received the liquor from the Skye

Company on July 20, 1939 (R. 342), and this stipu-

lation was fully substantiated by the testimony of

Inspector Brendel, who observed the liquor being

delivered at the petitioners’ premises (R. 349).

Indeed, petitioners stand convicted of a false entry

by their own evidence. Petitioner Meyer testified

that the liquor was received on July 21, but was

entered on Form 52A, on July 24, as having been

received on July 22 (R. 389).

Petitioners’ contention seems principally to be

that under the statute and Treasury Department

regulations a wholesale liquor dealer is not required

5 The count also charged that the entry was further false

in that it was not made on July 22, the date it purports to

have been made, but on July 24. It is unnecessary, however,

to consider this charge, since the conviction on Count 1 is

amply sustained on the basis of the charge with reference

to the falsification of the record as to the date on which the

liquor was received.

13

to enter the receipt of spirits on the day on which

the liquor was received, and that, in any event, the

petitioners’ failure so to record the receipt of the

liquor in question did not constitute a violation of

the statute unless the omission was actuated by a

bad motive, i. e., with an intent to deceive and de-

fraud the Government. This argument would re-

quire discussion if Count 1 had charged a violation

of that portion of che section which penalizes a

wholesale liquor dealer who neglects to keep a daily

record of liquor received (supra, pp. 2-3),’ or, pos-

sibly, if it were necessary to support the convic-

tion on that count on the basis of the charge

therein that the entry was false because not made

on the date it purportedly was made. (See foot-

note 5, supra, p.12). The argument clearly is not

relevant to the charge in Count 1 that the peti-

tioners represented by their entry that the liquor

was received on July 22 whereas, actually, it was

received on July 20, or, accepting their own testi-

mony, on July 21.

With respect to petitioners’ contention that con-

viction requires proof that the entry was made

“wilfully,”’ i. e., with ‘‘bad motive,’’ a sufficient

answer is that the statute penalizes, without qualifi-

cation, one who ‘‘makes a false entry.’’ Nowhere

does the statute make wilfulness an element of the

*It is therefore un ecessary to consider the construction

which shoul | be giver the provision of the statute requiring

a wholesale | quor ¢d ler to keep “daily” at his place of

business ar rord of .istilled spirits received and disposed

of (supra 2)

sj

f

i

‘

POSE LE ENED APNG AEE EN IIE acer’

ee a eee ee

or SNE ae OLE gh ELIS ED SL as CES SATE SERN LE CRP OEM OCT NAR,

14

crime of false entry, or indeed of any of the acts or

omissions penalized thereby. It is, of course, open

to Congress in the prohibition of certain acts—par-

ticularly in an area subject to notorious abuses—to

provide ‘‘that he who shall do them shall do them

at his peril.”” United States v. Balint, 258 U. §.

250, 252; see also Reg. v. Tolson, 23 Q. B. D. 168,

60 L. T. R. 899, 902 (1889). It is unnecessary to go

so far in the present case. Petitioner Meyer’s own

testimony shows that the entry was knowingly false

(R. 389). Certainly, in the absence of any quali-

fying language in the statute, no more is required.’

(2) Count 6 of Indictment 15,126 charged that

the petitioners made a false entry upon Treasury

Department Form 52 B in that this entry repre-

sented that certain spirits had been sent to Joe

Nelson of Leonard, Texas, whereas the shipment

was in fact made to one Joe Nelson at Kansas City,

Missouri (R. 11-12). Petitioners assert in effect

that there was no evidence to overcome the testi-

mony of petitioner Meyer that the liquor was in

fact shipped to Joe Nelson at Leonard, Texas, with

a stop-over at Kansas City, Missouri, other than

allegedly incompetent testimony respecting a state-

ment made by one Chester Tork to Government

agents, after his arrest and outside of the presence

7 The petitioners also assert that the Government was not

defrauded of its revenue by virtue of the false entry as to

the date the liquor was received. There is nothing in the

statute which makes a defrauding of the Government an

element of the crime.

15

of the defendants, that he was taking the liquor,

delivered to him at Kansas City, to Topeka, Kansas.

The District Court, however, in finding petition-

ers guilty upon Indictment 15,126, stated that ‘‘I

have eliminated from consideration all hearsay and

other improper testimony and have reached my con-

clusions solely upon the competent evidence in the

ease’? (R. 423-424). And the Cireuit Court of

Appeals, in sustaining petitioners’ conviction under

Count 6 of Indictment 15126, made no reference

to Tork’s statement, and rested its affirmance on

competent evidence which amply sustains the

convictions.

Indisputable evidence shows that the liquor was

not sent to Joe Nelson at Leonard, Texas, via

Kansas City. The liquor was transported from

petitioners’ premises in East St. Louis, Illinois, by

Riss & Co., a motor-vehicle common carrier, and

that company’s bill of lading (R. 318-319) and

delivery receipt (R. 325) show that the liquor was,

sent C. O. D. to ‘Joe Nelson, Kansas City, Mis-

souri.’’? If the shipment had in fact been destined

for Leonard, Texas, with a stop-over at Kansas

City, these instruments would, of course, have re-

flected that fact. 'The record also discloses that

upon its arrival at Kansas City the liquor was

received by Tork, who paid $649.32 therefor and

acknowledged receipt of the liquor by signing the

name Joe Nelson (R. 345, 347).

16

Petitioners further contend that there was n

evidence to show that they had knowledge that th

liquor was not in reality bound for Leonard, Texas

and, therefore, no evidence that they knew th

entry in Form 52B to be false. In addition to th

evidence heretofore recited, establishing that th

liquor was in fact really destined for Kansas City

there was evidence that prior to the shipment 0

the liquor petitioner Meyer had been informed b:

Revenue Inspectors that they had made an exten

sive investigation in Leonard, Texas, which dis

closed that no such person as Joe Nelson reside

there. Notwithstanding this information, the pe

titioners entered the shipment on Form 52B a

having been made to Joe Nelson, Leonard, Texas.

There is also evidence (R. 416) that petitione

shipped the liquor without labeling the outside o

the packages with either the name of Joe Nelsor

or the name of any consignee, although that con

stituted a violation of law (see footnote 3, supra

8).° In the light of this evidence it cannot b

doubted that petitioners in making the entry knev

it to be false.

* As the District Court intimated, this information shoul

at least have put Meyer “on notice of inquiry” (R. 375). 1

also shatters petitioners’ argument rested on the displa

to Meyer of a federal retailer’s license issued to Joe Nelso

of Leonard, Texas (Pet. 10). In view of this notice tha

Nelson was an impostor, there is no basis for any contentio

that punishment should not be meted out where “the whole

saler accepts the impostor in good faith” (Pet. 13).

® Petitioners attack as unsupported by the evidence (Pe

12) the statement in the opinion of the court belo.

i

17

CONCLUSION

Petitioners’ convictions were properly upheld,

there is plainly no important question of federal

law presented, and there is involved no conflict of

decisions. We therefore respectfully submit that

the petition for writ of certiorari should be denied.

FRANCIS BIDDLE,

Solicitor General.

WENDELL BERGE,

Acting Assistant Attorney General.

RaovuL BERGER,

Special Assistant to the Attorney General.

GroRGE F’. KNEIP,

W. Marvin SMITH,

Attorneys.

Fesruarky 1941.

that the packages were not labeled as required by law (R.

498). The record speaks for itself (R. 416).

Petitioners intimate that the court below, in referring to

the nonlabeling of the packages, apparently believed that

petitioners were charged in Count 6 with failing to label the

packages as required by law, instead of with making a false

entry. There is no basis in the language of the opinion for

any such assumption. And the petitioners’ omission to label,

contrary to law, obviously had a bearing on their knowledge

of the falsity of their entry.

U. S. GOVERNMENT PRINTING OFFICE: 1941

a

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POSE ATI. LLL EPR IEE LE

ene Pe ae