Auerbach v. United States, 9330

• Decision Date: 24 June 1943
• Docket Number: No. 9330,9331.,9330
• Citation: 136 F.2d 882
• Parties: AVERBACH v. UNITED STATES. JOHNSON v. SAME.
• Court: U.S. Court of Appeals — Sixth Circuit

136 F.2d 882 (1943)

AVERBACH v. UNITED STATES.

JOHNSON v. SAME.

Nos. 9330, 9331.

Circuit Court of Appeals, Sixth Circuit.

June 24, 1943.

W. M. Fuqua, of Nashville, Tenn. (Frank E. Ratner, of Nashville, Tenn., on the brief), for appellants.

Ward Hudgins, of Franklin, Tenn. (Horace Frierson, Jr., of Nashville, Tenn., on the brief), for appellee.

Before HICKS, HAMILTON, and MARTIN, Circuit Judges.

HICKS, Circuit Judge.

Appellants Auerbach and Johnson were jointly tried upon an indictment containing two counts. The first count charged them with conspiracy "to remove, deposit and conceal * * * certain * * * distilled spirits and wines" with respect to which a floor stock tax was levied by the Revenue Act of 1941 "with intent to defraud the United States of such tax." Overt acts charged were (1) that from August 1 to October 31, 1941, appellants owned and operated a retail liquor store at 213 Fourth Ave., Nashville, Tenn., known as Famous Brands Liquors; (2) that about August 30, 1941, appellants began to make unusually large purchases of liquor which increased during the latter part of September; (3) that on October 1, 1941, appellant Johnson presented an inventory purporting to contain all liquor owned or possessed by appellants as of that date on the premises or otherwise, and specifying the amount thereof to Inspector Gilpin; (4) that on or about October 1, 1941, appellants concealed in the basement 1203.57 proof gallons of distilled spirits and 367.35 wine gallons omitted from the inventory and intended for sale in evasion of the Revenue Act of 1941; (5) that appellants knew when they supplied the inventory purporting to cover all distilled spirits and wines possessed by them that it did not include the liquors in the basement nor all the liquor on the first floor of the premises; and (6) that on October 1, 1941, appellants possessed at their store 2461.93 more proof gallons of distilled spirits than were included in the inventory purporting to contain all the distilled spirits owned and possessed by them for sale on that date.

The second count was based on 26 U.S. C.A. Int.Rev.Code § 3321 and charged appellants with the substantive offense of depositing and concealing "in the basement under said liquor store * * * 1203.57 proof gallons of distilled spirits * * * and 367.35 wine gallons of wine on which the tax levied by said Sections of the Revenue Act of 1941 had not been paid, with intent to defraud the United States of such tax."

Motions by both parties to strike certain evidence and for directed verdicts were overruled and the jury found each appellant guilty on both counts. The appeals raise questions — (1) as to the sufficiency of the evidence to support the verdicts on both counts; (2) whether there was any substantial evidence establishing the corpus delicti; (3) whether it was error to charge that making a false inventory would support a finding of guilty on an indictment charging only a physical concealment; (4) whether certain testimony of one Hartman was admissible; and (5) whether it was error to overrule an objection of Johnson to the admission of certain statements of Auerbach.

Sections 533 and 534 of the Revenue Act of 1941, approved September 20, 1941, 26 U. S.C.A. Int.Rev.Acts, amended Sections 2800 and 3030(a) (1) (A), (2) of Internal Revenue Code, so as to levy an additional floor stock tax per proof gallon on all distilled spirits and brandies upon which the current tax had already been paid. The tax was payable on all spirits on hand October 1, 1941, and the return was to be filed and the tax paid on January 1, 1942. In aid of its collection, regulations were issued by the Commissioner of Internal Revenue requiring dealers to make an inventory of all liquors they had on hand on October 1, 1941. It was in connection with this inventory that the alleged concealments were made.

In 1939 Auerbach sought to enter the whiskey business in Nashville. He could not immediately qualify for a license and loaned Johnson $3,500 to take out a license in his own name and Johnson opened a store on July 8th of that year. For about two years he was the purported owner of the business but Auerbach operated the store as manager and each appellant acted as clerk during a part of each day and each drew small amounts weekly for living expenses.

In July 1941, the two became partners, Johnson retaining only a 10% interest. Auerbach obtained his interest by cancelling Johnson's indebtedness to him which had been incurred in setting up and carrying on the business.

The store included the street level floor with a back room on the same level and a basement under a part of the main floor. The stairway was enclosed. It descended back of the left show window, as one entered, and under a front counter. The opening to the stairway was inconspicuously located under the end of the counter away from the door and was only 36 inches high and 18 inches wide. Haddix, an Investigator of the Alcohol Tax Unit said, "You step down one or two steps on to a landing and then from the landing you go under an extension of the show window." McCane, an Inspector, said that he had to go down these stairs backward and that the handling of a case of whiskey took two people, one to stand on the stairs and the other to receive it through the opening. A truck driver who had delivered whiskey into the basement testified that he had to bend "a way down carrying a case in front" of him to get through the opening.

Johnson testified that the entrance had not been changed, and that it was just like it was when they went there. However, the opening was in a corner of the building, was small and would not be readily discovered by one unaware of its existence and there was no evidence that Gilpin, who received the inventory from Johnson, knew of the stairway.

The sales force consisted of Johnson, one O'Brien and Auerbach. Auerbach's wife helped occasionally. Johnson usually opened the store and worked until 6:30 or 7 at night. O'Brien observed the same hours. Auerbach usually came on about 12:30 and worked until closing time at 11 P. M.

Several wholesale liquor dealers testified that because of the expected incidence of the new tax they anticipated a rise in prices and had advised the trade that whiskey was going up in price and urged them to lay in large stocks at current prices. Appellants did this. They made unusually large purchases in September 1941. Auerbach testified that he could save money thereby.

The inventory of October 1, 1941, was made by Johnson....