Brief for the Respondents in Opposition — Wagner v. United States

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CITATIONS

Cases:

Camp v. United States, 16 F. (2d) 370, certiorari denied,

gee U. &. 706..2.-<: ere ‘s

Casey v. United States, 20 F. (2d) 752, affirmed, 276 U. s.

is ee ane sg Beuahice Se ENE Pee

Fairmount Glass Works v. Ceel Co. 28% U.S. 474_- ‘

Isgrig v. United Slates, 109 FP. (2a) tt pea eEyiee

Johnson v. United States, 32 F. (2d) 127. _-

Mattox v. United States, 146 U.S. 140___-

Perry v. United States, 39 F. (2d) 52, certiorari denied sub

nom. Capo v. United Slates, ae U.S. 769.

Slappey v. United States, 110 FP. (2d) 528

Tinkoff v. United States, 86 FP. (2d) 868, certiorari de nied,

301 U.S. 689__

Toledo Co. v. Computing Co., 261 U.S. 399

United States v. Miro, 60 F. (2d) Ss8_-

Statute:

Revenue Act of 1934, ¢. 277, 48 Stat. O80, 72

Section 145 (U.S. C., Title 26, See. 145). oo

Miscellaneous:

Rules of Practice and Procedure, after plea of guilty,

verdict or finding of guilt, in Criminal Cases, promulgated

by the Supreme Court May 7, 1934: Rule I1- ote

40171441 uw)

10

R=":

ESE EE PEI SALE ED ERY AIEEE ALS RENN SOMERS,

Inthe Supreme Court of the United States

OcroBeR TERM, 1941

No. 180

RaLtpH WAGNER, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES CIRCUIT COURT OF APPEALS FOR THE NINTH

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The District Court wrote no opinion. Its state-

ment made at the conclusion of the trial appears

on pages 134-144 of the record. The opinion of

the Circuit Court of Appeals (R. 146-150) is re-

ported at 118 F. (2d) 801.

JURISDICTION

The judgment of the Circuit Court of Appeals

was entered April 8, 1941 (R. 150-151). A

petition for rehearing was filed May 6, 1941,

and denied on May 19, 1941 (R. 151-152).

(1)

BANYAN TNC PIN EERO PS TAS EMR FENG DON LOE EPS LIE

2

The petition for a writ of certiorari was filed

June 17, 1941. The jurisdiction of this Court

is invoked under Section 240 (a) of the Judicial

Code, as amended by the Act of February 14, 1925.

See also Rule XI of the Rules of Practice and Pro-

cedure in Criminal Cases, promulgated by this

Court May 7, 1934.

QUESTIONS PRESENTED

The petitioner was convicted of wilfully attempt-

ing to evade and defeat his individual income tax

for the year 1934. The questions presented are:

1. Whether the petitioner received a fair trial

because the conviction was not based upon the

‘‘major premise’’ of the prosecution’s case.

2. Whether the circuit court of appeals correctly

refused to remand the ease to the district court for

a new trial, or for consideration of a motion for

a new trial, upon the grounds of newly discovered

evidence.

STATUTE AND COURT RULE INVOLVED

Revenue Act of 1934, c. 277, 48 Stat. 680, 724:

Src, 145. PENALTIES.

* * * + *

(b) Any person required under this title

to collect, account for, and pay over any tax

imposed by this title, 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 title or the payment

3

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 for not more

than five years, or both, together with the

costs of prosecution (U.S. C., Title 26, Sec.

145).

Rules of Practice and Procedure, after plea of

guilty, verdict or finding of guilt, in Criminal

Cases, promulgated by the Supreme Court May 7,

1934:

Rule II. Motions. (1) Motions after ver-

dict or finding of guilt, or to withdraw a plea

of guilty, shall be determined promptly.

(2) Save as provided in subdivision (3)

of this Rule, motions in arrest of judgment,

or for a new trial, shall be made within three

(3) days after verdict or finding of guilt.

(3) A motion for a new trial solely upon

the ground of newly-discovered evidence

may be made within sixty (60) days after

final judgment, without regard to the expi-

ration of the term at which judgment was

rendered, unless an appeal has been taken

and in that event the trial court may enter-

tain the motion only on remand of the case

by the appellate court for that purpose, and

such remand may be made at any time be-

fore final judgment.

* *

* * *

STATEMENT

The petitioner, Ralph Wagner, during the eal-

endar year 1934 was a rancher at Saugus, Califor-

LEE EM ee

: 4

nia (R. 17, 67-68, 80). On September 13, 1939, :

he was indicted in the United States District Court |

for the Southern District of California on charges

of wilful attempts to evade and defeat $25,105.79

of an income tax of $26,477.49 due from him for

the calendar year 1934 (R. 1-5). The indictment

charges that petitioner had a gross income of $100,-

050.83 during the calendar year 1934 and enumer-

ated specific deductions to which petitioner was

entitled, aggregating “‘$9,276.37, and no more”’ (R.

9-3); leaving a net income of $90,774.46 (R. 4).

It alleges that petitioner, knowing these facts, in

his income tax return filed on or about June 19,

1935, willfully reported a gross income of only

$16,731.43, with no deductions; in consequence,

petitioner’s return showed a tax due of only

$1,371.70 when in fact he owed a tax of $26,477.49

(R. 4-5). On October 9, 1939, the petitioner

pleaded not guilty and waived a jury trial (R. 6).

A partnership return of income for petitioner

and Ernest Wagner, and an individual income tax

return for the petitioner, were filed on June 15,

1935, for the year 1934 (Exs. 6 and 7, R. 15-16).

The partnership return reported net income of

$33,462.86 (R. 70), after taking deductions, inter

alia, of $13,271 for bad debts, and $2,833.80 for

depreciation of livestock (R. 72,73). One-half of

such net income, or $16,731.43, was transferred to

the individual return of the petitioner (R. 70),

and total income taxes of $200 were paid by him

in four $50 payments during the year 1935 (R. 16).

__

5

The Government presented evidence, which was

controverted, indicating that the claim made by

the petitioner that a partnership existed between

him and his adopted son, Evnest Wagner, was

false and that the entire income of the alleged

partnership was, in fact, the income of the peti-

tioner (R. 36, 88, 90, 105-106). There was, how-

ever, evidence indicating that they considered

themselves to be partners (R. 27, 29, 76, 85, 87).

The District Court concluded that while the facts

did not establish a partnership in law, they were

sufficient to raise a doubt whether there was fraud-

ulent intent in claiming that a partnership existed

(R. 140).

In addition to the partnership issue, however,

the Government proved by uncontroverted evi-

dence that the petitioner had prepared false records

in order to take false deductions for bad debts and

had taken false depreciation on the cost of livestock.

Thus, in order to claim a bad debt deduction, a note

from Charles Wagner for $1,765.25, which admit-

tedly was not due, was made on May 20, 1935, but

arbitrarily dated May 8, 1930, because the peti-

tioner was in ‘‘a little trouble in regard to his tax”’

(R. 52-53, 58,63). The petitioner then ‘‘aged’’ the

note by carrying it between his sock and the insole

of his shoe (R. 59). Another note of Theresa Pet-

tinger, mother of Ernest Wagner, which was

claimed as a bad debt (R. 77), was dated back and

discolored (R. 82). Deductions also were claimed

in the partnership return for depreciation, in the

6

amount of $2,833.80, based upon the cost and useful

life of certain valuable horses owned by the peti-

tioner (R. 22, 24-25, 72). However, the cost figures

for various horses, which were based on information

furnished by the petitioner (R. 18), were greatly

in excess of the actual cost.’

An internal revenue agent concluded that the

petitioner had received total net income of $91,-

695.25, on which the tax was $26,477.49 (R. 74).

Even if the alleged partnership did exist, the cor-

rect tax due from the petitioner therefore was

greatly in excess of that reported (R. 16). The

petitioner did not testify at the trial, but did call

two other witnesses (R. 75-103).

The District Court, finding ‘‘deliberate and pal-

pable fraud’’, found the petitioner guilty as

charged in the indictment (R. 134-144), and on

February 5, 1940, a sentence of two years in a pen-

itentiary and a fine of $2,500 was imposed (R.

7-8).

On February 6, 1940, the petitioner appealed

upon grounds, inter alia, that the verdict was con-

1 The petitioner’s falsifications may be tabulated as follows:

Horse Stated | Actual cost

Bert Abbe__-_-._. s Re at ae RR PE yee eee $3, 500 $550 (R. 42, 72)

I obs ooo Sci ade dee sanasObackadmmande 3, 500 800 (R. 26, 48)

PT as 6nd cds bana Garkadansuasbinngausashiceen 3, 500 800 (R. 26, 48)

Vide McKinney -_...-..- i -gkvaal au baakeaicin aide 500 175 (R. 26, 41)

Calumet Dotty. ....-...--.- | oidtaoddincdataaea 500 225 (R. 25, 42)

Valencia Dona -... LEAR it ee ore mieied 500 400 (R. 26, 46)

Annabelle Watts... . 500 300 (R. 26, 47)

7

trary to and unsupported by the evidence, and that

the District Court erred in denying a motion for a

new trial (R. 8-10).

On February 14, 1941, the petitioner filed a mo-

tion in the Cireuit Court of Appeals for a new

trial, or to remand the case to the trial court for a

new trial, on the ground of newly discovered evi-

dence (R. 117). This was supported by seven affi-

davits: (1) Two affidavits dated January 6, 1941,

and one dated September 21, 1940, stated that

Charles Wagner had told the affiants that he owed

petitioner money (R. 118-120, 120-121, 123-125).

(2) An affidavit from Theresa Pettinger stated

that her note was genuine (R. 127-128). (3) Two

affidavits, dated December 30 and October 17, 1940,

stated that McPherson, who testified at the trial

that he had sold petitioner for $550 the horse which

petitioner entered as costing $3,500 (R. 42, 72), had

told the respective affiants that the horse in fact cost

petitioner $3,500 and that his testimony was incor-

rect (R. 121-123, 125-126). (4) An affidavit, dated

April 26, 1940, stated that one Axcley, who testified

against petitioner (R. 56-65), had stated to affiant

that he would send petitioner to prison by fair

means or foul (R. 128-129).

The petitioner’s motion for a new trial, filed in

the Circuit Court of Appeals, was submitted and

considered in connection with the appeal (R. 145-

147). On April 8, 1941, the Cireuit Court of Ap-

peals affirmed the judgment of the District Court

8

(R. 146-151). A petition for rehearing was filed

on May 6, 1941, and denied on May 19, 1941 (R.

151-152).

ARGUMENT

I

The petitioner contends that he did not have a

fair trial because the government failed to prove

fraudulent use of a partnership device (Pet. 5-6,

9, 12-13, 19-20). The argument seems to be that

his conviction, based upon fraudulent deductions

for bad debts and depreciation (R. 136, 142-144), is

invalid because it is not responsive to the major

premise of the prosecution, that petitioner fraudu-

lently claimed the existence of apartnership. Peti-

tioner does not urge that there is any want of evi-

dence to support the conviction for fraudulent de-

ductions. His contention is either (a) that there

is a fatal variance between the indictment and the

proof (see Pet. 5, 9, 12-13) or (b) that the in-

dictment specifically exculpated him from any of-

fense relating to fraudulent deductions (see Pet.

19-20). The contention, in either view, is without

merit.

(a) The indictment does not set out the fictitious

partnership as the gravamen of petitioner’s guilt.

It specifies the receipt of a gross income of over

$100,000 and enumerates specific deductions of

something over $9,000; it charges that petitioner

was entitled to these deductions ‘‘and no more”’

(R. 2-3). Proof that petitioner had fraudulently

9.

taken other deductions in the partnership return,

which were reflected in the individual return, is

within the offense charged by the indictment.’

That offense, moreover, is the wilful attempt to

evade income taxes, under both the indictment

(R. 4) and the statute. Section 145 (b), supra;

United States v. Miro, 60 F. (2d) 58, 60-61

(C. C. A. 2d). Petitioner is not saved from con-

viction simply because the Government did not

prove every example of wilful tax evasion as to

which it introduced evidence.

(b) The indictment does not exculpate peti-

tioner of making false deductions. It states sim-

ply that on petitioner’s individual return he

claimed no deductons (R. 5). But the false de-

ductions made on the partnership return (R. 20-

21, 23, 24, 25) served automatically to reduce the

tax due on petitioner’s individual return, which

reported as his sole income one-half of the part-

nership income (R. 70). The wilful evasion of

taxes is the same whether the false deductions be

made in the partnership or the individual return,

and the indictment’s particularization of the only

allowable deductions (R. 4) made it impossible for

| petitioner to be in doubt that his false deductions

/ were challenged.

? Petitioner, neither in the trial court nor the appellate

courts, has attacked the indictment as too general ; nor did he

demand a bill of particulars. His objection, therefore, is

simply one of variance.

10

(c) Petitioner did not raise his objection in the

trial court and did not assign error on this ground

(R. 9-11). They were argued as “‘plain error”

in the court below and were correctly rejected as

*‘wholly without merit’”’ (R. 149-150).

II

THE COURT BELOW CORRECTLY DENIED THE PETI-

TIONER’S MOTION TO REMAND THE CASE TO THE

DISTRICT COURT FOR A NEW TRIAL ON THE GROUND

OF NEWLY DISCOVERED EVIDENCE

The judgment of conviction was entered on Feb-

ruary 5, 1940 (R. 7-8), and appeal taken on Febru-

ary 6, 1940 (R. 8-10). The sixth ground of the

appeal was that the District Court erred in deny-

ing the petitioner’s motion for a new trial (R.

10). However, that motion was on the grounds

that the judgment was contrary to the evidence and

the evidence insufficient in support thereof, and

that the District Court erred in receiving certain

testimony. The motion was denied on February

5, 1940 (R. 132-133). The present motion for a

new trial was filed for the first time in the Circuit

Court of Appeals more than a year later, on Feb-

ruary 14, 1941 (R. 117). Its denial plainly was

not reversible error.

(a) Petitioner has wholly failed to exercise the

diligence required to secure a new trial on the

ground of newly discovered evidence.’ The sup-

3 See Camp v. United States, 16 F. (2d) 870 (C. C. A.

6th), certiorari denied, 274 U. S. 754; Perry v. United

—

Prosscones , _—

11

porting affidavits show that most of the informa-

tion was brought to the attention of petitioner or

his attorneys considerably before the motion was

filed on February 14, 1941.*

(b) All of the affidavits except one (R. 127-128)

consist solely of impeaching evidence of a hearsay

nature. The conclusion of the court below that

they were insufficient to warrant a new trial is

clearly correct. Johnson v. United States, 32 F.,

(2d) 127 (C. C. A. 8th); Isgrig v. United States,

109 F. (2d) 131 (C. C. A. 4th). Slappey v. United

States, 110 F. (2d) 528 (C. C. A. oth) ; Casey v.

United States, 20 F. (2d) 752 (C. CO. A. 9th),

affirmed on other grounds, 276 U. 8. 413.

(ec) Finally, under Rule IT (3) of the Criminal

Rules, supra, the question of remanding the case

to the District Court for a new trial was discretion-

ary with the court below. Cf. Mattox v. United

States, 146 U.S. 140; Toledo Co. v. Computing Co.,

261 U.S. 399, 421. There was no abuse of such dis-

cretion. See Fairmount Glass Works v. Coal Co.,

287 U. S. 474, 485.

States, 39 F. (2d) 52, 54 (C.C. A. 5th), certiorari denied

sub nom. Capo vy. United States, 281 U. S. 169; Tinkoff v.

United States, 86 F. (2d) 868 (C. C. A. 7th), certiorari de-

nied, 301 U. S, 689.

‘Five of the seven affidavits deal with information so

made known between February 20 and July 27, 1940 (R. 126,

125, 129, 123, 121). A sixth was made known “after the

trial” (R. 119), and the seventh does not state when peti-

tioner or his attorneys knew of the information (R. 127-

128),

12

CONCLUSION

The decision below is correct. There is pre-

sented neither an important question nor a conflict

of decisions. It is therefore respectfully submitted

that the petition should be denied.

CHARLES FAHY,

Acting Solicitor General.

SamugEt O. CLARK, JT.,

‘Assistant Attorney General.

SEWALL Key,

WARNER W. GARDNER,

Gorpon B. TWEEDY,

Ear. C. CROUTER,

Special Assistants to the Attorney General.

Juty 1941.

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