Mitchell v. United States
| Citation | 208 F.2d 854 |
| Decision Date | 08 February 1954 |
| Docket Number | No. 14711.,14711. |
| Parties | MITCHELL v. UNITED STATES. |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Howard F. Sachs, Kansas City, Mo. (Phineas Rosenberg, Harlow B. King and Morelock, Hoskins & King, Kansas City, Mo., on the brief), for appellant.
Joseph L. Flynn, Asst. U. S. Atty., St. Joseph, Mo. (Edward L. Scheufler, U. S. Atty., Kansas City, Mo., on the brief), for appellee.
Before GARDNER, Chief Judge and STONE and THOMAS, Circuit Judges.
Appellant was indicted, tried and convicted on four counts of an indictment which charged him with attempting to defeat and evade a large part of his income taxes for the years 1945 through 1948. The first count of the indictment charged, "That on or about the 14th day of March, 1946, in the Western Division of the Western District of Missouri, David H. Mitchell, of Kansas City, Jackson County, Missouri, did wilfully and knowingly attempt to defeat and evade a large part of the income tax due and owing by him to the United States of America for the calendar year 1945, by filing and causing to be filed with the Collector of Internal Revenue for the 6th Internal Revenue Collection District of Missouri, at Kansas City, Missouri, a false and fraudulent income tax-return wherein he stated that his net income for said calendar year was the sum of $18,297.52 and that the amount of tax due and owing thereon was the sum of $5,882.69, whereas, as he then and there well knew, his net income for the said calendar year was the sum of $77,221.17, upon which said net income he owed to the United States of America an income tax of $48,650.79." The other counts of the indictment are identical in phraseology except as to the dates involved and the amounts of income and alleged amounts of taxes due. The indictment in fact contained six counts but Appellant was acquitted on Counts V and VI and these counts will require no further reference. We shall hereinafter refer to Appellant as Defendant.
It was the contention of the government and it introduced evidence tending to prove that for the year 1945 Defendant's income was approximately $77,000, whereas he reported an income of only $18,000; that for the year 1946 his income was approximately $57,000, whereas he reported an income of only $44,000; that for the year 1947 his income was approximately $69,000, whereas he reported an income of only $22,000; and that for the year 1948 his income was approximately $67,000, whereas he reported an income of only $43,000.
The government presented its proof under the so-called net-worth-plus-living-expenses method and also offered evidence as to specific omitted income. The government's proof under the net worth method tended to sustain the charges contained in the four counts of the indictment upon which Defendant was convicted. In addition to this proof the government produced evidence that Defendant during each of the years involved received certain substantial cash income which was not reported by him in his income tax returns. These items amount in the aggregate for each of the years involved as follows:
1945 — $14,859.96
1946 — $ 5,485.00
1947 — $ 9,217.52
1948 — $ 3,484.00
Defendant did not move for a judgment of acquittal at the close of all the evidence and the case was submitted to the jury on instructions to which no objections were made nor exceptions saved.
Defendant in seeking reversal in substance contends: (1) That the court erred in admitting in evidence over objection Defendant's financial statements based on market values which greatly exceeded cost; (2) That there was failure of proof in that the government failed to produce evidence showing that the alleged increase in Defendant's assets resulted from taxable income rather than from nontaxable income; (3) That the court erred in admitting in evidence Defendant's income tax returns for years prior to those charged in the indictment; (4) That the court erred in permitting the government to cross-examine certain of its own witnesses; (5) That the court erred in permitting argument by the government attorney as to prejudicial matters outside the record; (6) That the court erred in giving an instruction that negative testimony that payments were not made is legally weak testimony as compared with positive testimony; and (7) That the argument of the government attorney was improper and prejudicial to Defendant.
In the course of the trial the government introduced testimony of an accountant who had made a study of the Defendant's assets and the income arising therefrom for the years in controversy. The result of his study and compilation was reflected in an exhibit prepared by him in which there was listed Defendant's assets, liabilities and net worth for each year. It also showed or purported to show his net income for each year and his unreported net income. The testimony tended to prove the charges of attempted evasion of income taxes as charged in the various counts of the indictment. In addition to this testimony the government offered in evidence certain financial statements prepared by the Defendant and marked Exhibits 56, 57 and 58. Exhibit 56 was a financial statement presented to a bank March 23, 1949 by Defendant for the purpose of securing loans. Exhibit 57 was a similar statement presented to the bank February 20, 1950 for a like purpose and Exhibit 58 was a financial statement presented to the bank October 10, 1950 for a like purpose. All of these statements were prepared and presented to the bank prior to the time he was charged with the offenses described in the indictment. They were objected to on the ground that they were based upon market values as distinguished from cost. The objection was overruled and Defendant contends that the ruling was erroneous. These exhibits purported to represent the value of Defendant's property at the time they were made. They were admissions as to his financial standing and corroborative of the testimony already introduced by the government in support of its net worth theory, which is not here challenged. It is urged that these statements may have included increases in value which could not properly be considered as income. It is observed, however, that the value of the real estate so far as disclosed by the statements shows no increase in value and there was no evidence that the statements included any increase in value as distinguished from income. Proof of Defendant's income based upon the net worth theory had already been established by evidence to which no objection is here urged. That evidence...
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