United States v. Shotwell Manufacturing Co.
Opinion of the Court
delivered the opinion of the Court.
This case presents an unusual question involving the integrity of a criminal trial in the federal courts.
The Solicitor General has filed a motion in this Court to remand the case to the District Court for further proceedings. This motion is based on a proffer of evidence
A clear appreciation of both the proceedings in the lower courts and the peculiar circumstances in which the Government’s motion arises is essential to an understanding of why we believe the motion to remand must be granted.
In 1953 the respondents and Frank J. Huebner, after a jury trial in the United States District Court for the Northern District of Illinois, were convicted of willfully attempting to evade the 1945 and 1946 federal corporate income taxes of the Shotwell Manufacturing Company.
On appeal, the Court of Appeals affirmed as to the dismissal motion but reversed as to the suppression motion, set aside the convictions, and remanded the case for a new trial. 225 F. 2d 394.
For an understanding of the significance of the newly discovered evidence
Sauber and Cain gave similar testimony, except that Sauber fixed Busby’s first visit to him at about the middle of March 1948. Cain’s explanation of Shot-well’s failure to report the black-market receipts in its income tax returns was that he believed such receipts were not taxable since they were used by Shotwell to purchase black-market supplies
It is obvious that the Government’s new evidence casts the darkest shadow upon the truthfulness of the disclosure testimony given by or on behalf of the respondents in the District Court. If true, it indicates that what the respondents have sought to represent in the District Court, the Court of Appeals, and in this Court as a voluntary disclosure, made in a timely manner and in good faith, was instead but a further step in a conspiracy to “fix” Shotwell’s tax difficulties, possibly involving the cor
The path to our decision is clearly marked by this Court's actions and pronouncements in two recent cases, Communist Party v. Subversive Activities Control Board, 351 U. S. 115, and Mesarosh v. United States, 352 U. S. 1. In each case the Court refused to consider the questions presented for review in the face of a challenge to the integrity of the record based on newly discovered evidence. In Communist Party the Court remanded the case to the Board with directions to resolve the charges of taint, and to make a fresh determination on the merits, if taint were found.
“The untainted administration of justice is certainly one of the most cherished aspects of our institutions. Its observance is one of our proudest boasts. This Court is charged with supervisory functions in relation to proceedings in the federal courts. See McNabb v. United States, 318 U. S. 332. Therefore, fastidious regard for the honor of the administration of justice requires the Court to make certain that the doing of justice be made so manifest that only irrational or perverse claims of its disregard can be asserted. . . . We cannot pass upon a record containing such challenged testimony. We find it necessary to dispose of the case on the grounds we do, not in order to avoid a constitutional adjudication but because the fair administration of justice requires it.”
In Mesarosh, supra, at p. 14, the Court said:
“This is a federal criminal case, and this Court has supervisory jurisdiction over the proceedings of the federal courts. [Citing McNabb, supra, in a footnote.] If it has any duty to perform in this regard, it is to see that the waters of justice are not polluted. Pollution having taken place here, the condition should be remedied at the earliest opportunity.”
A convincing showing is of course necessary to bring these principles into play. We think that such a showing has been made here. The newly discovered evidence contained in the affidavits from the prospective witnesses Graflund and Huebner cuts to the very heart of the testimony adduced by respondents to show that they made a timely and bona fide disclosure to the Treasury, the sole issue involved in the suppression hearings and the issue on which the outcome of the case in the Court of Appeals turned. It is plain that either the testimony in the Dis
In both the Communist Party and Mesarosh cases, supra, the action of the Court enured to the benefit of the defendants. In this instance the further proceedings below may work to the advantage of the Government.
In these circumstances, acceptance of the respondents’ position on this motion would be tantamount to sanctioning a rule which would prohibit appellate review upon a record suspect of taint, if the taint might operate to the disadvantage of the defendants, but which would nevertheless require review if the taint might operate to their advantage. We cannot subscribe to that quixotic result. The fair administration of justice is not such a one-way street.
The respondents contend that the motion to remand should originally have been addressed to the Court of Appeals, and that we should now send the Government back to that court.
We conclude with a word about the nature of the further proceedings in the District Court. The additional evidence to be presented by both sides will be confined to the suppression issue. The District Court will make such new findings of fact on this issue as may be appropriate in light of the further evidence and the entire existing record (see Carroll v. United States, 267 U. S. 132, 162), including findings on the question of the timeliness of respondents’ alleged disclosures.
In accordance with the views set forth in this opinion, we make the following disposition of this case: (1) this Court’s order of February 25, 1957, which granted with limitations the Government’s petition for certiorari, is vacated and such petition is granted without restriction; (2) the judgment of the Court of Appeals is vacated; and (3) the case is remanded to the District Court for further proceedings consistent with this opinion.
It is so ordered.
Internal Revenue Code of 1939, § 145(b), 53 Stat. 63. The Shotwell Company manufactured candy and marshmallows. Cain was President, Sullivan, Executive Vice President and General Counsel, and Huebner, Vice President. Huebner is no longer a respondent here. See notes 6 and 7, infra.
Under that policy, first announced by the Treasury Department in 1945, the Department did not refer to the Department of Justice for prosecution cases of intentional income tax evasion where the taxpayers had made a clean breast of things to the Treasury before any investigation had been initiated by the Revenue Service! This policy was set forth in various informal announcements by Treasury officials, but was never formalized by statute or regulation. The policy was abandoned in January 1952.
The propriety of this pretrial procedure is not before us.
The Court of Appeals did not pass on other contentions made by the respondents in support of a reversal of their conviction.
More specifically, the Court of Appeals held that there was an effective voluntary disclosure and that the Government’s use of the evidence thereby obtained from the respondents violated their rights under the Self-Incrimination Clause of the Fifth Amendment. The District Court simply held that the alleged voluntary disclosure was defective, and did not discuss the Fifth Amendment. In the present posture of this case we do not reach the correctness of these rulings of the two lower courts, or any other question going to the merits of the respondents’ conviction.
We deferred consideration of the petition and cross-petitions for certiorari for some months on the basis of representations made by the Solicitor General in his letters of December 6, 1955, and June 1, 1956, which culminated in the filing of the Government’s motion to remand. See 351 U. S. 980. As originally filed, the cross-petition was conditional on the Government’s petition being granted. After the Government moved to remand, respondents withdrew the conditional limitation, and Huebner withdrew his cross-petition in its entirety.
Huebner later withdrew his answer and consented to the Government’s motion.
Respondents point out that this limitation of our writ in effect amounted to a denial of the Government’s petition for certiorari, and therefore that the motion to remand, which was not before the Court of Appeals, must be regarded as an attempt to invoke an original jurisdiction which we do not possess. We shall dispose of respondents’ point by vacating our limited writ and granting, nunc pro tunc, the Government’s petition for certiorari, without restriction. This removes all question as to our jurisdiction, 28 U. S. C. § 2106 ; Mesarosh v. United States, 352 U. S. 1, and prejudices neither party because we shall decide only the issues raised by the motion to remand.
Respondents have made no such showing in opposition to the Government’s motion as would justify our questioning the accuracy of the Solicitor General’s representation that the Government’s proffered evidence is “newly discovered.”
The Government puts the figure at some $380,000; the respondents’ figure is about $160,000.
Except for the amount of $6,000 which was reported -in the Shotwell returns.
Although the Treasury policy at the time denied deductibility to such black-market expenditures, the courts later held that this kind of expenditure was deductible. See Sullenger v. Commissioner, 11 T. C. 1076.
According to Graflund’s affidavit, it would appear that the respondents were spurred into action after Sam Krane, a Special Agent of the Internal Revenue Service, visited the Shotwell office on June 21, 1948. The affidavit states that Krane requested records and information relating to Shotwell’s transactions with one David G. Lubben, from whom Shotwell had been receiving large sums of money which were not recorded in its regular books; that Graflund made certain records available to Krane and was “criticized” by the respondents for having done so; and that Graflund conferred with Busby within a few days after Krane’s visit.
In his affidavit Huebner states: “On November 13, 1952, Sauber testified at the hearing on the defendant’s motion to suppress evidence that Busby and Cain had contacted him in March, 1948. After hearing Sauber testify, I told Cain I thought the voluntary disclosure date was supposed to be June 15, 1948. Cain said to me, ‘Ssshhh! There is nobody that knows anything about this. Keep quiet.’ ”
The Solicitor General represents that if the motion to remand is granted Revenue Agent Joseph M. Lima will testify that on July 30, 1948 he was instructed by his Group Supervisor, Ralph Johnson, to make an immediate audit of Shotwell’s 1946 return; that thereafter he was instructed by Johnson to allow (as offsets) over-ceiling purchases totaling more than $300,000, which were wholly unsubstantiated and whose allowance was contrary to the existing Revenue Service policy; and that he then prepared a report showing a tax deficiency for 1945 and 1946 of about $20,000, which report he destroyed at Johnson’s direction in September 1948, after the Intelligence Unit of the Service had made inquiries about the case. In this connection Huebner states in his affidavit:
“Cain also told me, sometime in about late July, 1948, that he was about to settle the tax case. Shortly thereafter, Cain told me he had settled the tax case for a tax deficiency of $20,000.00.
“In October, 1948, Busby told me that there had been a meeting in the fraud division at the Internal Revenue office and that hell had broken loose; that some Internal Revenue people had a heck of a time destroying papers that had been made up for the purpose of billing Shotwell for taxes.”
See note 15, supra.
Section 14 (a) of the Subversive Activities Control Act expressly authorizes courts of appeals to remand cases to the Board for the taking of further evidence. 64 Stat. 987, at 1001-1002. Our authority to act in similar fashion is found in the broad provisions of 28 U. S. C. § 2106, which grants us power, incident to our appellate jurisdiction, to "vacate . . . any judgment” brought “before [us] for review” and to “require such further proceedings to be had as may be just under the circumstances.”
The Government does not concede the correctness of the Court of Appeals’ decision upon the existing record. Cf. United States v. Johnson, 327 U. S. 106, 111, 112.
Respondents did not urge below, nor do they suggest here, that the question of admissibility of the disputed evidence was properly an issue for the jury. Rather their contention has been that the judge should have sustained the motion to suppress.
It has also been suggested that these charges of fraud could be dealt with at the new trial which the Court of Appeals has ordered. But as the Court of Appeals has directed suppression of the evidence obtained by the Government as a result of the alleged voluntary disclosure, it seems clear that at the new trial the Government could not use that evidence, or the fruits thereof, unless the “suppression” aspect of the judgment of the Court of Appeals is vacated. We think that the sound administration of justice precludes that course because, if the Government's evidence is true, the net effect would be to grant the respondents a new trial, not otherwise justified, procured by their own fraud.
Respondents have contended that the Government’s new evidence is irrelevant to the issue of timeliness because, even assuming its truth, the disclosure was timely since no formal investigation was initiated by the Revenue Service until after July 1948, the time that the Government’s new evidence indicates that the respondents first communicated with the Treasury. We find it unnecessary to deal with this contention because the new evidence is in any event clearly relevant to the question whether a bona fide disclosure was in fact ever made. Moreover, in the present state of the record this Court should not pass on respondents’ argument as to timeliness because (a) the District Court has not yet made a finding on this issue, and (b) the Treasury “voluntary disclosure policy” was never formulated with sufficient precision to enable us to apply it mechanically.
Dissenting Opinion
Dissenting opinion of
By remanding this case so that the Government can introduce additional evidence to save the conviction thrown out by the Court of Appeals, I think the Court takes unnecessary and unprecedented action which may have far-reaching and unfortunate ramifications not yet clearly foreseen. I would deny certiorari and thus permit the case in its regular course to go back to the District Court for a new trial pursuant to the decision of the Court of Appeals. At this trial the Government could introduce any evidence which it now has, new or otherwise, and a full hearing could be had on its charges of perjury and fraud.
I think the Fifth Amendment questions raised here are important, unsettled and not susceptible to offhand resolution, particularly with respect to incriminating evidence which the defendants actually turned over to the Government in hope of securing immunity from prosecution. In Bram v. United States, 168 U. S. 532, 542-543, the Court referred with approval to the rule that
“ ‘. . . a confession, in order to be admissible, must be free and voluntary: that is, must not be extracted*248 by any sort of threats or violence, nor obtained by any direct or implied promises, however slight, nor by the exertion of any improper influence. ... A confession can never be received in evidence where the prisoner has been influenced by any threat or promise; for the law cannot measure the force of the influence used, or decide upon its effect upon the mind of the prisoner, and therefore excludes the declaration if any degree of influence has been exerted.’ ” (Emphasis supplied.)
In accord with this statement it appears to have been generally assumed in this Court that the Fifth Amendment bars the use against a defendant in a criminal prosecution of confessions or admissions secured from him by promises of immunity. See, e. g., Hardy v. United States, 186 U. S. 224, 229; Ziang Sung Wan v. United States, 266 U.S. 1, 14; Smith v. United States, 348 U. S. 147, 150. And so far as I can tell this Court has never considered whether lack of good faith deprives a suspect of the Fifth Amendment’s protection when he makes disclosures under a promise of immunity, or under just what circumstances and to what extent this might be true. I do not mean to intimate any view on the merits of this problem now, but I do register a protest against the manner in which the majority disposes of the case.
I believe the majority has also disregarded another significant and crucial consideration — the role of the jury in passing on the admissibility of defendants’ disclosures. In Wilson v. United States, 162 U. S. 613, 624, the Court laid down a rule which it has never questioned:
“When there is a conflict of evidence as to whether a confession is or is not voluntary, if the court decides that it is admissible, the question may be left to the jury with the direction that they should reject the confession if upon the whole evidence they are satisfied it was not the voluntary act of the defendant.”
In the lower federal courts there seems to be considerable difference of opinion as to whether the Wilson case makes it mandatory that the jury participate in the process of determining whether a confession is voluntary or whether the jury’s participation is a matter of discretion with the trial judge.
1 think that the principles established in Wilson and subsequent cases clearly apply to the questions of admis
The Court now gives the Government an opportunity to introduce new evidence in an attempt to save a conviction it has lost in the Court of Appeals. If this does not technically infringe the protection against double jeopardy it seems to me to violate its spirit. Cf. Green v. United States, 355 U. S. 184; Kepner v. United States, 195 U. S. 100, 128-129. In fact it is even worse in some respects. Only the Government stands to benefit from this partial new trial while the defendants must fight to keep what they already have. Not a single case has been referred to or discovered where defendants have been subjected to such piecemeal prosecution.
Both the Government and the Court concede that the action taken here is extraordinary but such disposition is justified on the ground that this is an exceptional case which called for extraordinary action. I do not agree. In essence all the Government proposes to do on remand is to impeach the testimony of certain witnesses for both sides with alleged newly discovered evidence. No witness has recanted nor do the defendants concede that their testimony was false. If the Government can partially reopen a case to impeach witnesses what rational basis is there for denying it a similar right in any case when new facts appear which persuasively suggest that it could strengthen its evidence in order to save a conviction on appeal? This possibility emphasizes the anomalous nature of what is done here.
The Court proceeds on the assumption that it would be improper for us to review the suppression question on a record which might contain materially false testimony
I think this case is a dangerous precedent which should not be launched needlessly into the stream of the law.
"We are not concerned with the motivating force behind an individual’s deciding to come in and talk to us about his evasion. If he ‘gets religion’ before we have done anything, he will not be prosecuted.” Treasury Press Release, May 14, 1947.
The entire subject is annotated in great detail at 170 A. L. R. 567. Also see 85 A. L. R. 870.
Neither Mesarosh v. United States, 352 U. S. 1, nor Communist Party v. Subversive Activities Control Bd., 351 U. S. 115, serves as any authority for the Court’s action. In the Mesarosh case the Government had secured a conviction which had been upheld by the
In the Communist Party case administrative findings were challenged and this Court remanded the case to the agency so that it might consider the record free of any perjurious testimony by government witnesses. The administrative proceeding there can hardly be equated with the criminal prosecution involved here. Moreover, in both the Mesarosh and Communist Party cases the Court’s action operated to protect the rights of defendants, not as here to aid the Government. In view of our traditional methods of criminal justice this difference is not without importance.
Reference
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