Agnew v. State

• Decision Date: 01 June 1982
• Docket Number: No. 903,903
• Citation: 446 A.2d 425,51 Md.App. 614
• Parties: Spiro T. AGNEW v. STATE of Maryland, et al.
• Court: Court of Special Appeals of Maryland

Page 614

51 Md.App. 614

446 A.2d 425

Spiro T. AGNEW v. STATE of Maryland, et al.

No. 903.

Court of Special Appeals of Maryland.

June 1, 1982.

T. Rogers Harrison, with whom were Mudd & Harrison, Tawson, on the brief, for appellant.

David L. Scull, Chevy Chase, with whom were Kass & Skalet, William A. Dobrovir, and Dobrovir, Oakes & Gebhardt, Washington, D.C., on the brief for John McMillen, et al.

Diana Gribbon Motz, Asst. Atty. Gen., with whom was Stephen H. Sachs, Atty. Gen. of Md., on the brief for appellee, State of Md.

Argued before MORTON, MOORE, JJ. and RICHARD M. POLLITT, Special Judge.

MOORE, Judge.

On October 5, 1976, three Maryland taxpayers sued Spiro T. Agnew, former Vice President of the United States (1969-73), Governor of Maryland (1967-69), and Baltimore County Executive (1963-67), to recover certain payments allegedly made to him in connection with State Roads Commission contracts during his terms of office. The action sought an accounting, imposition of a constructive trust, and restitution. Five years later, the suit properly arrived at this Court ¹ after an arduous airing of the issues, with the State ultimately participating as intervenor. On May 7, 1981, a judgment of $147,500 plus interest of $101,235 was awarded against Mr. Agnew in the Circuit Court for Anne Arundel County (Williams, J.). On appeal, he presents nine issues:

1. Whether the sworn statements of I. H. (Bud) Hammerman, II, Lester Matz, Allen Green, and Jerome B. Wolff, made to the United States Attorneys in 1973, were properly admitted into evidence.

2. Whether Mr. Agnew's plea of nolo contendere to federal tax evasion was properly admitted against him.

3. Whether intervention by the State of Maryland was properly granted.

4. Whether the judgment was outside the cause of action stated in the complaint, thus denying Mr. Agnew due process of law.

5. Whether the State of Maryland is estopped from imposing financial liability upon Mr. Agnew.

6. Whether the testimony of George W. White, Jr., Mr. Agnew's attorney for several years, was erroneously compelled and inadmissible.

7. Whether the trial judge's award of prejudgment interest constituted an abuse of discretion.

8. Whether liability and damages were established by clear and convincing proof.

9. Whether the lower court's procedural and evidentiary rulings cumulatively deprived Mr. Agnew of a fair and impartial trial.

The taxpayers cross-appealed, claiming that the trial court erred in dismissing them, after the trial, for lack of standing. They contend, first, that they proved special damages to the full extent required by Maryland case law, and, second, that the "enormous public importance" of the case was sufficient to confer standing even if it was technically lacking.

Because the four sworn statements referred to in issue No. 1 supplied the "majority of facts" upon which the trial judge said he relied, the question of their admissibility is logically the fulcrum of the case. Before proceeding to this issue, we present a factual backdrop for this unfortunate historic episode.

I

Under a system described by Mr. Agnew as a "long-established pattern of political fund-raising in the State," Maryland State Bar Association v. Agnew, 271 Md. 543, 552, 318 A.2d 811 (1974), some engineering and architectural firms were accustomed to making "political contributions" in cash in return for being awarded contracts involving road and bridge construction by the State Roads Commission. The head of this commission in 1967-69 was Mr. Wolff, appointed by then Governor Agnew. ² The latter's political supporter and friend was Mr. Hammerman, who met with Mr. Wolff to set up a system to collect and distribute the cash "contributions." The plan was that Mr. Wolff would inform Mr. Hammerman which of 50 or so engineering firms in the State would be likely to receive a particular contract and Mr. Hammerman would then solicit a payment--ranging from one to five percent of the contract price.

Initially, the money was to be divided equally but, Mr. Hammerman said in his statement, Mr. Agnew vetoed this arrangement, insisting upon half of the payments for himself. Mr. Hammerman retained Mr. Agnew's share of the payments in a safe deposit box. Upon inquiry by Mr. Agnew from time to time, Mr. Hammerman would tally the number of "papers" he had--a "paper" being $1,000--and deliver the money in a plain envelope to Mr. Agnew. This system netted $60,000 for Mr. Agnew, according to Mr. Hammerman.

Two engineers, Allen Green of Green Associates, Inc., and Lester Matz of Matz, Childs & Associates, Inc., preferred the direct approach. Mr. Green said in his statement that he delivered to Mr. Agnew five or six times a year an envelope containing $2,000 to $3,000 in cash. With the assistance of Internal Revenue Service agents, Mr. Green determined from his business and personal records that he paid Mr. Agnew $11,000 in both 1967 and 1968, $8,000 in both 1969 and 1970, and $6,000 in both 1971 and 1972, a total of $50,000.

Mr. Matz in his statement revealed that he gave Mr. Agnew an envelope containing $20,000 in cash on July 17, 1967, the money then "owed" by his firm in connection with state contracts. Early in 1969, Mr. Matz went to the White House and gave Mr. Agnew an envelope containing $11,000 in cash, again characterizing this payment as money "owed" for contracts received during Mr. Agnew's tenure as governor. Several subsequent payments adding up to $6,500 were made, according to Mr. Matz, aggregating the total sum of $37,500.

This allegedly "long-standing system" became public knowledge in 1973 with the disclosure that the months-long investigation by the United States Attorney's office for the District of Maryland had led to Mr. Agnew, then Vice President. ³ From June until October of that year, the investigation, which had grown out of a grand jury probe of an alleged kickback scheme involving Baltimore County officials and construction contractors, rapidly enveloped Messrs. Agnew, Matz, Wolff, Green, and Hammerman, culminating in a criminal information against Mr. Agnew for felony tax evasion. ⁴

On October 10, 1973, in the United States District Court for Maryland, Mr. Agnew's plea of nolo contendere to that charge was accepted just as his letter of resignation was being delivered to the Department of State. Present at that uniquely fateful event was then United States Attorney General Elliott Richardson who stated in part for the federal government:

"In accordance therefore with the agreement of counsel, I offer for the permanent record of these proceedings an exposition of the evidence ⁵ accumulated by the investigation conducted by the Office of the United States Attorney for the District of Maryland as of October 10, 1973.

Because this exposition is complete and detailed, it is sufficient for present purposes simply to state that this evidence establishes a pattern of substantial cash payments to the defendant during the period when he served as Governor of Maryland in return for engineering contracts with the State of Maryland.

....

[As to sentencing,] I am firmly convinced that, under all the circumstances, leniency is justified. I am keenly aware, first, of the historic magnitude of the penalties inherent in the Vice President's resignation from his high Office and his acceptance of a judgment and conviction for a felony. To propose that a man who has suffered these penalties should, in addition, be incarcerated in a penal institution, however brief, is more than I, as head of the government's prosecution arm, can recommend or wish.

....

Out of compassion for the man, out of respect for the Office he has held, and out of appreciation for the fact, by his resignation, he has spared the Nation a prolonged agony that would have attended upon his trial, I urge that the sentence imposed on the defendant by this Court not include confinement."

Before sentencing Mr. Agnew declared, inter alia :

"My decision to resign and enter a plea of nolo contendere rests on my firm belief that the public interest requires a swift disposition of the problems which are facing me....

I am aware that witnesses are prepared to testify that I and my agents received payments from consulting engineers doing business with the State of Maryland during the period I was Governor.

With the exception of the admission that follows, I categorically deny the assertions of illegal acts on my part made by government witnesses.

I admit that I did receive payments during the year 1967 which were not expended for political purposes and that therefore these payments were income, taxable to me in that year, and that I so knew.

I further acknowledge that contracts were awarded by state agencies in 1967 and other years to those who made such payments and that I was aware of such awards. I am aware that government witnesses are prepared to testify that preferential treatment was accorded to the paying companies pursuant to an understanding with me when I was Governor. I stress, however, that no contracts were awarded to contractors who were not competent to perform the work and, in most instances, state contracts were awarded without any arrangement with the payment of money by the contractor.

I deny that the payments in any way influenced my official actions."

Mr. Agnew was sentenced to three years' imprisonment which was suspended, placed on probation, ⁶ and fined $10,000. United States v. Agnew, Crim.No. 73-0535 (D.Md.1973). Subsequently, he paid an additional $148,000 in federal income tax, including penalty and interest.

Mr. Green pleaded guilty to income tax evasion under 26 U.S.C. § 7212(a) (1976 ed.) and served one year in prison. United States v. Green, Crim.No. 74-0685 (D.Md.1974). Mr. Hammerman also pleaded guilty to the same charge and was sentenced to 18 months' imprisonment and fined $5,000. United States v. Hammerman, Crim.No. 74-0684 (D.Md.1974). Upon appeal, however, his plea...