Hanson v. United States, 14137.

• Decision Date: 29 December 1950
• Docket Number: No. 14137.,14137.
• Citation: 186 F.2d 61
• Parties: HANSON v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

186 F.2d 61 (1950)

HANSON v. UNITED STATES.

No. 14137.

United States Court of Appeals Eighth Circuit.

December 29, 1950.

Francis Murphy, Fargo, N. D., for appellant.

P. W. Lanier, U. S. Atty., Fargo, N. D., for appellee.

Before GARDNER, Chief Judge, and WOODROUGH and THOMAS, Circuit Judges.

GARDNER, Chief Judge.

Appellant was convicted on an indictment of four counts, each charging that he had wilfully and knowingly attempted to defeat and evade a large part of the income tax due and owing by him to the United States of America, in violation of Section 145(b), Title 26 U.S.C.A. The counts of the indictment refer respectively to the calendar years 1945, 1946, 1947 and 1948, it being charged in each count that appellant reported a certain specified income on which he paid but that in each of said years his income was substantially greater than reported and on which he paid the income tax. Appellant will be referred to as defendant.

At the time of the trial defendant was a resident of Lisbon, North Dakota, where he was engaged in operating a garage and during the times involved he kept no books of account but maintained a bank account and had his cancelled checks. In May or June, 1947, Mr. O. C. Berg, a Deputy Collector of Internal Revenue, called upon defendant advising him that he desired to check defendant's income tax returns for the years 1944 and 1945. Being advised by defendant that he had kept no records, Mr. Berg asked to examine defendant's bank statements and cancelled checks, which defendant turned over to him. Mr. Berg also examined defendant's tax returns for the years 1943 and 1946 and procured from defendant his bank statements and cancelled checks for those years. Mr. Berg, from the reports and statements furnished him by the defendant, and from statements made to him by the defendant, reconstructed defendant's income for the years in question, and being of the view that defendant had understated his income, Mr. Berg called in a Mr. Sherrill W. Anderson, Special Agent of the United States Treasury Department, to verify and corroborate Mr. Berg's findings. Mr. Anderson calculated, from the data furnished him and from an independent investigation, defendant's income on what is referred to in the record as a net worth basis. Following this investigation the indictment herein was returned and before the time of trial defendant moved to suppress the evidence obtained from him by the government's agents and to dismiss the indictment because it was based upon evidence obtained from the defendant in violation of the Fourth and Fifth Amendments to the Constitution of the United States. A hearing was had on this motion, at which testimony was taken and the court denied the motion. Each of the counts of the indictment alleged the amount of income reported, the tax due on the reported income, the alleged true and correct income which should have been reported, and the true and correct income tax which defendant should have paid. This may be summarized as follows:

                  Count   Year     Income    Tax on Income   Corrected     True Tax
                                  Reported     Reported        Income         Due
                  I       1943   $4,537.92      $792.36      $12,875.88   $ 3,625.34
                  II      1944    5,259.48       819.87       33,126.79    15,207.41
                  III     1945    5,034.80       879.70       18,609.96     6,298.28
                  IV      1946    4,917.39       679.00       30,592.74    12,319.12
                

The government's auditors testified to an examination of the defendant's bank statements, cancelled checks, deposit slips, and other bank records. From these and from statements made to them by defendant, they prepared a summary of the gross earnings, expenses, and net taxable income of the defendant for each one of the years in question and upon this net taxable income they computed the tax which they asserted defendant should have paid. The government, also through its auditors, introduced testimony as to the net worth of the defendant on January 1, 1943, and the net worth of the defendant at the end of each calendar year thereafter up to and including December 31, 1946. These calculations were embodied in exhibits introduced and received in evidence. Generally speaking, these exhibits purport to show gross receipts, operating expenses, allowable deductions, net income and income tax due calculated upon the corrected net income basis. The results show substantially the same figures charged in the indictment, as above set out. The defendant objected to the evidence produced by the government's auditors upon the same grounds set out in his motion to suppress and his objections were overruled.

Defendant took the witness stand in his own behalf and in explanation of the discrepancy between his returns for the years involved and the reconstructed income testified to by the government's witnesses, stated that prior to 1941 he lived in Elliott, North Dakota, where he operated an elevator, a cream station, a hardware store, sold livestock, and operated an electric light plant; that when he moved from Elliott, North Dakota, to Lisbon, North Dakota, in 1941, he was without means; that thereafter many people who owed him money when he lived in Elliott paid him approximately $50,000 or $60,000 of money due him; that certain properties which he had in Elliott became valuable and that he realized large sums of money by the sale of these properties, but that he had no profits from the sales, and that all of these sums approximating $127,000 in amount were placed in his bank account; that any additional money not accounted for was the result of the fact that he hauled a great many cattle for other people and the sale price of these cattle went through his account without representing any income to him; that he did not report the money received from his Elliott debtors because he had been advised that it was not taxable. He testified that he at no time intentionally evaded payment of any income tax due. In rebuttal the government offered evidence to show that defendant had filed no income tax returns for the period of twenty years prior to 1940. The evidence was received over defendant's objection. At the close of all the testimony defendant moved for judgment of acquittal, which motion was denied and the case was submitted to the jury on instruction to which neither party saved exceptions.

The jury found the defendant guilty on all four counts and pursuant to this verdict the court entered judgment and sentence of imprisonment for a period of three years on count 1 and for a like period of three years on each of counts 2, 3 and 4, the sentences on counts 2, 3 and 4 to run concurrently with the sentence imposed on count 1. Defendant seeks reversal on substantially the following grounds: (1) the court erred in denying defendant's motion to suppress and to dismiss and to strike evidence obtained from defendant in violation of the Fifth Amendment; (2) the court erred in admitting evidence that defendant did not pay any Federal income tax for the years 1920 to 1940; (3) the court erred in admitting in evidence Exhibit 484; (4) the court erred in denying defendant's motion for judgment of acquittal.

We think the paramount, if not the controlling, issue in this case is whether the court erred in overruling defendant's objections to the evidence of the government's auditors which confessedly was based upon admissions made by the defendant and on the documents consisting of cancelled checks, bank statements and other memoranda which defendant delivered to them before the indictment was returned. The question was raised by motion to suppress, by objection to the testimony and by motion to strike the testimony, and finally by a motion for judgment of acquittal. The contention of the defendant is based on the Fifth Amendment to the Constitution of the United States, which in effect provides that no person "shall be compelled in any criminal case to be a witness against himself". It is the contention of the defendant that the words "in any criminal case" are not limited to the actual trial and that they should be so construed as to include the request of the Revenue Agent for the documents made use of in the prosecution against the defendant. The privilege is a personal one and need not be asserted. At the time defendant produced his cancelled checks and bank statements and made certain admissions to the Revenue Agent he was not under arrest; neither had he been charged with any offense, nor was he threatened with prosecution or otherwise coerced. The papers referred to were his private papers and he might have stood on his constitutional right to decline to produce them. This he did not do but without compulsion he voluntarily delivered the documents to the Revenue Agent. Neither was he under any compulsion to make the admissions which he made to the Revenue Agent. But it is said that he should have been warned that the documents might be used as evidence against him. At the time in question there is no evidence that a criminal prosecution was in contemplation. The government agent, in the performance of his duty, went to defendant, advising him that he wished to check his income tax returns for the years in question. There is nothing to indicate that there was even any suspicion at that time that the defendant was guilty of a criminal offense. In these circumstances we think there was no occasion nor necessity for warning the defendant that any statements he might make or documents he might produce would be used against him in a criminal prosecution. Wilson v. United States, 162 U.S. 613, 16 S.Ct. 895, 40 L.Ed. 1090; Powers v. United States, 223 U.S. 303, 32 S.Ct. 281, 56 L.Ed. 448; United States v. Block, 2 Cir., 88 F.2d 618; United States v. Heitner, 2 Cir., 149 F.2d 105; Himmelfarb v. United States, 9 Cir., 175 F.2d 924; Nicola v. United States, 3 Cir., 72 F.2d 780. In Wilson v. United States, supra, the court, addressing itself to this contention,...