New Banner Institute, Inc. v. Dickerson, 80-1141

• Decision Date: 06 May 1981
• Docket Number: No. 80-1141,80-1141
• Parties: NEW BANNER INSTITUTE, INC., Appellant, v. G. R. DICKERSON, Director Bureau of Alcohol, Tobacco and Fire Arms, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 216

649 F.2d 216

NEW BANNER INSTITUTE, INC., Appellant, v. G. R. DICKERSON, Director Bureau of Alcohol, Tobacco and Fire Arms, Appellee.

No. 80-1141.

United States Court of Appeals Fourth Circuit.

Argued Nov. 13, 1980.

Decided May 6, 1981.

Jack F. McGuinn, Columbia, S. C. (Lewis C. Lanier, Columbia, S. C., on brief), for appellant.

Mary Ellen Goman Slocum, Asst. U. S. Atty., Columbia, S. C. (Thomas E. Lydon, Jr., U. S. Atty., Lincoln C. Jenkins, III, Asst. U. S. Atty., Columbia, S. C., on brief), for appellee.

Before WINTER and PHILLIPS, Circuit Judges, and FIELD, Senior Circuit Judge.

JAMES DICKSON PHILLIPS, Circuit Judge:

On this appeal, New Banner Institute, Inc. (New Banner) challenges the refusal of the district court to set aside the decision of the Director of the Bureau of Alcohol, Tobacco and Firearms (ATF) revoking New Banner's licenses as a dealer in firearms under 18 U.S.C. § 923(e). New Banner was found not entitled to the licenses because David Kennison, chairman of its board, had been "convicted" in Iowa of a crime that had the effect of preventing him from shipping, transporting or receiving firearms in interstate commerce under section 922(g) and (h). See id. § 923(d)(1)(B). We hold, however, that the earlier expunction of Kennison's conviction under Iowa's deferred judgment statute made inappropriate consideration of that conviction as a predicate conviction for purposes of section 922(g) and (h). Accordingly, we reverse the judgment of the district court and remand with instructions.

I

Kennison was arrested in Iowa in September 1974 on a charge of kidnapping, and in January 1975 he pleaded guilty to a charge of carrying a concealed weapon, a crime that under Iowa law permits a sentence of more than one year. See Iowa Code § 695.3. Pursuant to Iowa Code § 789A.1, however, the Iowa court deferred judgment and placed Kennison on one year's probation. Upon Kennison's successful completion of his probationary term, the trial court, on February 5, 1976, discharged him without entry of judgment and expunged his record as provided under Iowa Code § 789A.6.

New Banner submitted its applications for three licenses to deal in firearms on May 14, 1976. These applications required that the applicant list all "responsible persons" as defined and asked the question whether any person so listed had been convicted of a crime punishable by imprisonment for a term exceeding one year. Kennison was listed as a responsible person, but his conviction was not reported. This was done upon the advice of counsel, the attorney who had represented Kennison on the Iowa charge, the Iowa trial judge who had sentenced Kennison, South Carolina officials charged with the regulation of firearms in that state and an official of ATF at its Columbia, South Carolina office. From this advice it was concluded that Kennison's conviction need not be reported because the Iowa case against him had been closed without entry of judgment. The licenses were granted by ATF on the basis of these applications.

In December 1976, however, New Banner received a letter from the ATF Regional Counsel stating that "subsequent investigation" had revealed Kennison's conviction in Iowa on the concealed weapon charge, a crime punishable by imprisonment in excess of one year. The Regional Counsel stated his belief that New Banner's applications were, therefore, false with respect to Kennison's having been convicted. Counsel also remarked that Kennison's conviction justified denial of New Banner's licenses under 18 U.S.C. § 923(d) (1)(B), which provides that ATF may deny a license to a corporation if "any individual possessing, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation is prohibited from transporting, shipping, or receiving firearms or ammunition in interstate or foreign commerce under section 922(g) and (h) of this chapter." Subsections 922(g) and (h) in turn make it unlawful for any person "convicted" of a "crime punishable by imprisonment for a term exceeding one year" to ship, transport or receive firearms or ammunition in interstate commerce. The Regional Counsel concluded by stating that, since New Banner had been given an opportunity to surrender its licenses and had failed to do so, ATF planned to seek revocation of those licenses for the reasons stated in the letter under section 923(e).

The Regional Regulatory Administrator of ATF issued Notices of Contemplated Revocation of License to New Banner pursuant to 27 C.F.R. § 178.73. The reason given in these notices for the contemplated revocation was the failure of New Banner to list Kennison in its applications for licenses as a "responsible person" who had been convicted of a crime punishable by imprisonment exceeding one year in violation of 18 U.S.C. § 924(a).

Following an informal hearing and the issuance of Notices of Revocation of License that alleged that "the licensee wilfully violated the provisions of the Gun Control Act of 1968," New Banner requested a formal hearing before an administrative law judge. At this hearing both New Banner and the ATF presented evidence and legal argument on the issue whether Kennison had been "convicted" in Iowa. ATF then contended that New Banner's licenses could be revoked either because it had failed to include Kennison's felony "conviction" in its license applications in violation of section 924(a) or because it was not entitled to a license under section 923(d)(1)(B).

The ALJ, however, rejected both of ATF's contentions, and in his Recommended Decision denied revocation of New Banner's licenses. He found that New Banner had not "willfully" failed to include Kennison's "conviction" in its applications as required by section 924(a) because it "honestly believed" that Kennison had not been "convicted." He further found that ATF could not now base revocation of New Banner's licenses on a violation of section 923(d) (1)(B) because it had never given New Banner "notice" of this charge.

The Director of ATF, however, approved the ALJ's decision only in part. He found that the ALJ had properly denied revocation based on a violation of the section 924(a) application requirements because that section requires a "knowing" failure, which had not been shown. The Director, on the other hand, held that revocation was properly based on a violation of section 923(d) (1)(B). He concluded that, looking at the whole proceeding, New Banner had been given the opportunity to defend and had actually litigated the charge of violation of section 923(d)(1)(B). After a review of the relevant case law, he found that under either federal or Iowa law, Kennison had been "convicted" despite application of the Iowa deferred judgment statute. The Director therefore concluded that Kennison would be prohibited from shipping, transporting or receiving firearms or ammunition under section 922(g) and (h). He then found, based on an examination of the abundant evidence in the record, that Kennison was an individual possessing, directly or indirectly, the power to direct or cause the direction of the management and policies of New Banner. He therefore held that New Banner should have been denied its licenses under section 923(d)(1)(B) and that this violation could serve as the basis for revocation of those licenses under section 923(e). The district court upheld this disposition by the Director.

II

Although New Banner has asserted a number of statutory and constitutional challenges to the Director's revocation of its firearms licenses, we need only address the issue of Kennison's Iowa "conviction" inasmuch as our resolution of that issue is dispositive of this appeal. See Hagans v. Lavine, 415 U.S. 528, 543, 94 S.Ct. 1372, 1382, 39 L.Ed.2d 577 (1974). The question whether a person has been "convicted" for purposes of the federal firearms law is ultimately one of federal law, regardless of whether the alleged predicate "conviction" resulted from a violation of federal or state law. See, e. g., United States v. Lehmann, 613 F.2d 130, 135 (5th Cir. 1980); United States v. Benson, 605 F.2d 1093, 1094-95 (9th Cir. 1979). Contra United States v. Brzoticky, 588 F.2d 773, 775 (10th Cir. 1978). Applying federal law in this case, Kennison's plea of guilty to the Iowa charge of carrying a concealed weapon must be regarded as a "conviction" because, as the Supreme Court held in Boykin v. Alabama, 395 U.S. 238, 242, 89 S.Ct. 1709, 1711, 23 L.Ed.2d 274 (1969), a "plea of guilty is itself a conviction." See United States v. Benson, 605 F.2d at 1095. Therefore, it is clear that, at least during the period of Kennison's probation on the Iowa charge, his "conviction" on that charge would have barred him from shipping, transporting or receiving firearms under section 922(g) and (h). See, e. g., United States v. MacGregor, 617 F.2d 348 (3d Cir. 1980); Barker v. United States, 579 F.2d 1219, 1226 (10th Cir. 1978).

The Supreme Court, however, has recently recognized that, while "the fact of a felony conviction imposes a firearm disability," that disability may be removed by the vacation of the conviction on appeal or "by some affirmative action, such as a qualifying pardon or a consent from the Secretary of the Treasury." Lewis v. United States, 445 U.S. 55, 60-61, 100 S.Ct. 915, 918, 63 L.Ed.2d 198 (1980). Thus, the question is the effect, if any, of the expunction of Kennison's record under Iowa's deferred judgment statute for purposes of the Gun Control Act of 1968.

In United States v. Purgason, 565 F.2d 1279, 1280 (4th Cir. 1977), we addressed an analogous question in holding that a conviction that had been expunged under the federal Youth Corrections Act had "no further operative effect" and therefore could not be used as the predicate conviction in a prosecution under 18 U.S.C. § 922(h)(1) and 18 U.S.C.App. § 1202(a)(1)....