McKenna v. United States, 15201.

• Citation: 232 F.2d 431
• Decision Date: 26 April 1956
• Docket Number: No. 15201.,15201.
• Parties: Leo J. McKENNA, Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

232 F.2d 431 (1956)

Leo J. McKENNA, Appellant, v. UNITED STATES of America, Appellee.

No. 15201.

United States Court of Appeals Eighth Circuit.

April 26, 1956.

COPYRIGHT MATERIAL OMITTED

A. E. Sheridan, Waukon, Iowa, for appellant.

Alex Dim, Asst. U. S. Atty., St. Paul, Minn. (George E. MacKinnon, U. S. Atty., St. Paul, Minn., on the brief), for appellee.

Before GARDNER, Chief Judge, and JOHNSEN and VOGEL, Circuit Judges.

GARDNER, Chief Judge.

Appellant was charged, tried and convicted on Count I of an indictment containing two counts, each count charging a violation of Section 145(b), Title 26 U.S.C., in that he 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 by filing and causing to be filed with the Collector of Internal Revenue for the District of Minnesota, a false and fraudulent income tax return. The indictment involved the calendar years 1947 and 1948 and the counts are substantially identical except as to the year covered and the amount of alleged income and income tax involved. Appellant was acquitted on Count II of the indictment covering the year 1948. We shall hereinafter refer to appellant as defendant.

At and for some years prior to the year 1947 defendant was and had been engaged in business as a new and used car dealer and as a new and used farm implement dealer at Caledonia, Minnesota. For the calendar year 1947 defendant in his income tax return reported his net income as $8,585.36 and his income tax as reported for that year was $1,316.32. He reported his total receipts from the sale of new and used cars and farm machinery for the year 1947 as $90,927.08 and he reported that his inventory on January 1, 1947 was $4,716 and that his inventory at the close of the year 1947 was $5,150. He reported his wife as a dependent and she did not make a separate return. At the time of the trial defendant claimed that he had reported his income for the year 1947 on the cash basis but it was the contention of the government that he was reporting on the accrual basis and that the accrual basis was the appropriate method of reporting and calculating his gross and net income under Regulation 111, Section 29.41-2. His books and records as kept by him were incomplete and inadequate to clearly reflect his income and in these circumstances the government accountants calculated his income for the year 1947 on the accrual basis and found that to be $44,653.27. They also, for the alleged purpose of corroboration, calculated his net income for the year 1947 on the net worth basis to be $31,934.78. The government accountants also calculated defendant's net income for the year involved on the bank deposit basis to be $23,855.95.

In making sales defendant used a machine called a "whiz ticket machine" which makes duplicate tickets at the same time which are sort of sales slips. For the years 1947 and 1948 there were over six thousand of such "whiz tickets". When the government accountants first interviewed defendant in 1949 and questioned him concerning his records he told them that everything was in the whiz tickets and the cancelled checks and that everything in the whiz tickets was a reflection of what was happening and that they would be able to get their information from those particular records. He told them, "You can get it all from the whiz tickets and the cancelled checks, it's all there". Relying on defendant's statements the accountants prepared Government's Exhibit 171 which was a transcription of the whiz tickets for the year 1947. Although the government accountants asked for all his books and records defendant failed to disclose to them certain books and records which were produced by defendant for the first time at the trial of the case. Defendant as a witness in his own behalf admitted that he had not properly reported his gross receipts from the sale of new and used automobiles and new and used farm machinery for the year 1947 on his income tax return, and his wife testified that the bank account usually reflected the total of the sales from the whiz tickets. The government accountants were not supplied with the ledger sheets for the years 1947 and 1948 although they asked for all of defendant's records. The government accountants in calculating defendant's income on the accrual basis relied upon his statement that the so-called whiz tickets reflected everything that was happening and that they could get a record of all his financial transactions from the whiz tickets and cancelled checks. It was disclosed during the trial, however, that a large number of the whiz tickets were in effect duplicates arising from the fact that a whiz ticket was issued at the time of sale and a whiz ticket involving the same transaction was issued at the time of payment if the sale were not a cash one. These duplications amounted in the aggregate to $24,813.20 so that the net income of defendant as calculated on the accrual basis for 1947 was shown as $19,840.07. The evidence will be further developed during the course of this opinion.

Defendant was given a preliminary hearing January 29, 1954, at which time he was bound over to the grand jury and on February 20, 1954 the grand jury returned the indictment under which he was tried. On March 16, 1954 he filed motion for bill of particulars, to which the government responded by furnishing certain information demanded, and the court denied the motion as to all other demands not supplied by the government in response to his motion. Thereafter and on May 13, 1954, he filed motion for continuance which was supported by affidavit. This motion was denied and the case was called for trial May 27, 1954. The trial continued for nineteen days. At the close of all the testimony defendant interposed a motion for acquittal which was denied and thereupon in due course the case was submitted to the jury on instructions to which no exceptions were saved by defendant, and the jury after due deliberation returned its verdict acquitting defendant on Count II of the indictment and finding him guilty as charged on Count I of the indictment. Thereafter and before entry of judgment defendant moved for judgment of acquittal notwithstanding the verdict or in the alternative for a new trial on the grounds set out in his motion for judgment of acquittal interposed at the close of all the evidence. This motion was in due course denied and the court entered judgment pursuant to the jury's verdict sentencing defendant to imprisonment for two and one-half years and to pay a fine of $5,000. From the judgment and sentence thus entered defendant prosecutes this appeal prodigally charging innumerable alleged errors.

It will not be possible to consider in detail all of these alleged errors. While we have laboriously gone through this entire record and considered each charge of error we shall attempt as far as possible to group the questions presented and limit our discussion to such points as impress us as being substantial.

As has been observed, defendant filed a motion for a bill of particulars and also a motion for continuance. On consideration of the motion for bill of particulars the government furnished a substantial part of the information demanded and the court in its order passing on the motion said:

"1) Counsel for the Government has stated in open court that the Government is relying in this case on the accrual method of accounting rather than on the cash method;

"2) The Government has disclosed in open court that its theory in this case is based on defendant\'s understatement of adjusted gross income resulting in understatement of taxable net income. The Government has advised the Court and counsel for the defendant that it intends to corroborate such theory by the bank deposit method and net worth method;

"3) The Government has filed a receipt given by the defendant which discloses that all papers, books and documents heretofore obtained by Agents of the Internal Revenue Service from defendant were returned to the defendant;

"4) Counsel for the Government advised the Court that for the year 1947 the recapitulation of 1947 sales tickets, the so-called `whiz tickets\', have been delivered to counsel for defendant, as well as a summary of disbursements for that year. Counsel for the Government advises that it will deliver to counsel for defendant a recapitulation of the 1948 sales tickets, the so-called `whiz tickets\' as well as a summary of disbursements for 1948;

"5) In all other respects defendant\'s motions are herewith denied."

The motion was addressed to the sound judicial discretion of the court and its ruling should not be reversed in the absence of an abuse of that discretion. Ray v. United States, 8 Cir., 197 F.2d 268. There was in our opinion no abuse of discretion in denying the motion, nor do we think its denial was prejudicial to defendant. The motion for continuance was likewise addressed to the discretion of the trial court and a careful consideration of the record convinces us that there was no abuse of discretion in denying the motion. Mellor v. United States, 8 Cir., 160 F.2d 757; Braatelien v. United States, 8 Cir., 147 F.2d 888.

It is strenuously urged that the court erred in denying defendant's motion for judgment of acquittal interposed by him at the close of all the evidence. In considering this contention we must view the evidence in a light most favorable to the prevailing party and we must assume that all conflicts in the evidence were resolved by the jury in favor of the government. The government being the prevailing party was entitled to all such favorable inferences as might reasonably be drawn from the facts proven and if when so considered reasonable minds might reach different conclusions then the case presented questions of fact to be decided by the jury, rather than questions of law to be determined by the court. Myres v. United States, 8 Cir., 174 F.2d 329...