371 U.S. 341 (1963), 16, Shotwell Mfg. Co. v. United States

Docket Nº:No. 16
Citation:371 U.S. 341, 83 S.Ct. 448, 9 L.Ed.2d 357
Party Name:Shotwell Mfg. Co. v. United States
Case Date:January 14, 1963
Court:United States Supreme Court
 
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Page 341

371 U.S. 341 (1963)

83 S.Ct. 448, 9 L.Ed.2d 357

Shotwell Mfg. Co.

v.

United States

No. 16

United States Supreme Court

Jan. 14, 1963

Argued October 11, 15, 1962

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

In a jury trial in a Federal District Court, petitioners were convicted in 1953 of willfully attempting to evade federal corporate income taxes. They claim that their privilege against self-incrimination was violated by the admission of evidence obtained as a result of voluntary disclosures made by them in good faith in reliance upon the Treasury's then "voluntary disclosure policy," i.e., that delinquent taxpayers could escape possible criminal prosecution by disclosing their derelictions to the tax authorities before any investigation of them had commenced. After remand by this Court, 255 U.S. 233, the District Court held an additional full evidentiary hearing and again denied suppression of such evidence, finding that "no honest bona fide voluntary disclosure" had ever been made and that fraud had "permeated" petitioners' disclosure showing at both suppression hearings and at the trial. The District Court also denied motions for a new trial and overruled challenges, made for the first time in 1957, to the original grand jury and petit jury arrays. The Court of Appeals sustained these findings and rulings, overruled other challenges to the remand and original trial proceedings, and affirmed the convictions.

Held: the judgment is affirmed. Pp. 343-367.

1. In view of the facts that no bona fide honest disclosure ever had been made in reliance on the "voluntary disclosure policy," and that the purported disclosure was a further effort to perpetrate a fraud on the Government, admission of the evidence so obtained did not violate petitioners' privilege against self-incrimination. Pp. 346-352.

(a) Rejected as specious is petitioners' suggestion that the District Court's finding of fraud is infirm because the falsity of Shotwell's black market payments, on which that finding principally rested, was an immaterial consideration in view of the Commissioner's then ruling that black market payments were not includible in the cost of goods sold. Pp. 346-347.

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(b) The Treasury's "voluntary disclosure" policy, addressed to the public generally and not to particular individuals, was not an invitation aimed at extracting confessions of guilt from particular known or suspected delinquent taxpayers, and the privilege against self-incrimination does not apply to disclosures made in reliance on that policy. Pp. 347-349.

(c) Even if petitioners had been initially justified in relying on the Treasury's general offer of immunity, they were no longer entitled to rely upon it when they decided to make a fraudulent disclosure. Pp. 349-350.

(d) What is involved here is not a case of incriminatory evidence having been induced by the Government, but one in which petitioners attempted to hoodwink the Government into what would have been a flagrant misapplication of its voluntary disclosure policy. P. 352.

2. The record does not support petitioners' contention that the District Court should have ordered a new trial because it appeared at the second suppression hearing that an important Government witness had testified falsely at the trial respecting the amount of his black market payments to the corporate petitioner. Pp. 352-357.

3. There is no truth in petitioners' charges that the remand proceedings were the product of fraud and other gross improprieties on the part of the Government, and that they should, therefore, be held for naught. Pp. 357-361.

4. The two lower courts correctly held that petitioners' motions attacking the grand and petit jury arrays, filed more than four years after the trial, were untimely under Federal Rule of Criminal Procedure 12 (b)(2), and their further finding that petitioners were not prejudiced in any way by the alleged illegalities in the selection of the juries supports the conclusion that a sufficient showing had not been made to warrant relief from the effect of that Rule. Pp. 361-364.

5. The record does not sustain the contention of petitioner Sullivan that he was denied a fair trial because (1) the only specific evidence against him was an alleged admission which a government witness testified Sullivan had made to him, and the government witness had later recanted that testimony; and (2) the trial judge's instructions allowed the jury to consider evidence that had not been admitted against him. Pp. 364-367.

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(a) There was ample evidence in the record to carry the case against Sullivan to the jury and to support its verdict of guilt. Pp. 364-365.

(b) There was no error in the trial judge's instructions to the jury that certain evidence was not being admitted against Sullivan, and should not be considered against him, and it must be presumed that the jury conscientiously observed such instructions. Pp. 365-367.

287 F.2d 667 affirmed.

HARLAN, J., lead opinion

MR. JUSTICE HARLAN delivered the opinion of the Court.

This case is here for the second time in consequence of the remand that was ordered at the 1957 Term. United States v. Shotwell Mfg. Co., 355 U.S. 233.

In 1953, petitioners were convicted after a jury trial in the United States District Court for the Northern District of Illinois of willful attempted evasion of federal income taxes of the Shotwell Manufacturing Company for the years 1945 and 1946. Int.Rev.Code of 1939, § 145(b), 53 Stat. 63. The individual petitioners, Cain and Sullivan, were officers of Shotwell, a candy manufacturer. The charge was that the company's tax returns for these years had not reported substantial income, received from one Lubben, on sales of candy above OPA (Office of Price Administration) ceiling prices -- so-called "black market" sales.

On appeal, the convictions were reversed and a new trial ordered by a divided Court of Appeals on the ground that the District Court should have ordered suppressed certain evidence, used at the trial, which petitioners had furnished the Government in reliance on the Treasury's then

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"voluntary disclosure policy." 225 F.2d 394. In substance, that policy amounted to a representation by the Treasury that delinquent taxpayers could escape possible criminal prosecution by disclosing their derelictions to the taxing authorities before any investigation of them had commenced. See 355 U.S. at 235, note 2; pp. 348-352, infra.

The evidence held subject to suppression consisted of tabulations purporting to show the amount of unreported black market income received by Shotwell from Lubben during the two tax years in question, and offsetting black market payments by Shotwell for the purchase of raw materials which almost matched the black market receipts. Concluding that petitioners' disclosure had been a genuine one (contrary to the District Court's finding), and that it had been made before any investigation of Shotwell's tax returns had started, and was thus timely (a question not reached by the District Court, 355 U.S. at 236), the Court of Appeals held that the disclosure was valid, and that the Government could not, consistently with the Fifth Amendment, use the disclosed material at petitioners' trial.

The matter then came here for review on the Government's petition for certiorari, during the pendency of which the then Solicitor General moved to remand the case to the District Court for further proceedings on the suppression issue -- an issue which both sides recognized had properly been one for the court, and not for the jury. 355 U.S. at 244; see United States v. Lustig, 163 F.2d 85, 88-89, cert. denied, 332 U.S. 775. The motion was based on the claim that newly discovered evidence in possession of the Government would show that the Court of Appeals' decision as to the bona fides and timeliness of the alleged disclosure was the product of a tainted record, involving an attempt on the part of these [83 S.Ct. 452] petitioners "to perpetrate a fraud upon the courts." 355

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U.S. at 241. Without reaching any of the questions decided by the Court of Appeals, we vacated the judgment of that court and remanded the case to the District Court with instructions to reexamine the disclosure episode in light of the parties' additional evidence and that already in the record, to decide anew the suppression issue, and, depending upon its decision, to enter a new judgment of conviction or an order for a new trial, as the case might be. 355 U.S. at 245-246.

The District Court, after a full evidentiary hearing, again denied suppression, finding that "no honest, bona fide voluntary disclosure" had ever been made, and that fraud had "permeated" the petitioners' disclosure showing at both suppression hearings and at the trial.1 These ultimate findings rested primarily on subsidiary findings that, although Shotwell's black market receipts had not, in themselves, been misrepresented, the claim that they had been almost entirely offset by payments for the purported purchase of black market supplies was false -- the truth being (contrary to what petitioners Cain and Sullivan had testified in the earlier proceedings) that most of Shotwell's black market receipts, "totaling between three and four hundred thousand dollars," had found their way into the pockets of Cain, Sullivan and Huebner, all Shotwell officers. The District Court also denied motions for a new trial, and overruled challenges, made for the first time in July, 1957, to the original grand and petit jury arrays.

The Court of Appeals, sustaining these findings and rulings2 and overruling other challenges to the remand

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and original trial...

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