Ballantyne v. United States, 15822.

• Decision Date: 10 October 1956
• Docket Number: No. 15822.,15822.
• Citation: 237 F.2d 657
• Parties: Ray C. BALLANTYNE, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

237 F.2d 657 (1956)

Ray C. BALLANTYNE, Appellant, v. UNITED STATES of America, Appellee.

No. 15822.

United States Court of Appeals Fifth Circuit.

October 10, 1956.

Louis W. Graves, Jr., James R. Cornish, Joseph W. Cash, Houston, Tex., for appellant.

Malcolm R. Wilkey, U. S. Atty., James T. Dowd, Asst. U. S. Atty., Houston, Tex., for appellee.

Before RIVES, CAMERON and BROWN, Circuit Judges.

RIVES, Circuit Judge.

This appeal is from two judgments of conviction for contempt of court, upon each of which the appellant received a sentence of six months imprisonment. The second sentence was to run concurrently with the first. Each conviction was for the appellant's refusal to obey an order or orders of the court requiring him to answer certain questions propounded to him as a witness before the grand jury, notwithstanding his claim that his answers to the questions might tend to incriminate him.

In view of the importance of the matter and at the risk of being prolix, we set forth at some length the appellant's status in the community, the setting in which the questions were asked, and the legal procedure. The appellant was Vice-President and operating head of Balco, Inc., a corporation engaged in construction work and in the building of roads and bridges. He had a family consisting of a wife and one child, belonged to a church in which he took an active part, to one social club, had never been accused of any crime, nor had he knowingly associated with criminals. It is against that excellent background and reputation that the appellant was guilty of conduct so questionable as to cause him to invoke the protection of the Fifth Amendment.

The beginning of the controversy was an examination of the income tax returns of Balco, Inc. in connection with an investigation of "some third parties." The examining agent, Mr. Taylor, testified, "There were numerous cash withdrawals made, which if we could not determine them to have gone to a third party, under such examination they would have to be constructive dividends to Mr. Ballantyne." All of these cash withdrawals were on checks made payable to Balco, Inc. from either the City of Pasadena or the City of LaPorte, Texas. A few relatively small checks were cashed directly without being deposited to the credit of Balco, Inc., and, during the years 1951, 1952 and 1953, approximately $50,000.00 was withheld from checks which were deposited, the deposit slips listing the amounts of the checks and the cash withheld, which was always in round numbers of so many thousand dollars. The checks were endorsed for the corporation by the appellant, and the deposit slips were made out in the appellant's handwriting. Mr. Taylor testified that, "As agent for the corporation he was the last known person to have custody of the money." He, of course, called upon Ballantyne for an explanation of the withdrawals.

"Q. In as near the language as Mr. Ballantyne used, give us everything he said to you in that respect. A. Quoting as near as I can recall: `To tell you that I would be ruined financially. I would have to leave town.\'"

Again, in explanation of three particular items of cash withdrawals, Ballantyne used only one word "graft."

In due course, Agent Taylor reported to George A. Stephen, Group Supervisor of the Intelligence Division of the Internal Revenue Service, stationed at Houston, Texas, that Ballantyne had told him that the withdrawals were for graft. Mr. Stephen testified that, "Mr. Ballantyne's statement to Mr. Taylor seemed to have a definite relationship" with "certain information (which) had been brought to our attention by the Internal Revenue agents concerning possible income of certain individuals," and, an "investigation that was already in progress." Accordingly, Stephen had Ballantyne subpoenaed to testify concerning the disposition of the withdrawals.

The Intelligence Division was obviously seeking to ascertain the recipients of the alleged prior payments and Mr. Stephen testified that they were not investigating Mr. Ballantyne for income tax fraud. At the same time, Mr. Stephen conceded that,

"The only knowledge I have about any bribery at all is the statements Mr. Ballantyne made when he appeared in our office, and the statement that Internal Revenue Agent Taylor told me was made to him by Mr. Ballantyne, that the money had gone for graft payments to city officials."

Ballantyne was accompanied to this examination by his attorney. Initially, his attorney explained to the special agent,

"that he though he had an out for Mr. Ballantyne in that he could plead the Fifth Amendment, because it might possibly incriminate him under state law to testify.

"Q. What state law, if any, did he make particular reference to? A. Bribery of public officials."

After the special agent had explained to the attorney that the Fifth Amendment to the Constitution did not protect against disclosures of state crimes, the attorney replied, "Well, there is another possibility that there might be incrimination for tax evasion."

Ballantyne declined to answer any questions as to the disposition of the withdrawals, on the ground that the answers might tend to incriminate him, assigning both the Fourth and Fifth Amendments, but did engage in some off the record conversations.

"Q. What did Mr. Ballantyne tell you in these off the record remarks during the time the sworn statement was being taken? A. He told the agents present and made the statement in the — during the course of the proceedings that he was just a small fish, and that we weren\'t after the real parties. That there were other ones that had made bigger payments than he had ever made, and that type of thing was pretty universal, and that it would ruin him to furnish any information concerning any payments of graft."

Mr. Stribling, another special agent present, remembered the off the record conversation as follows:

"Q. Can you tell us in Mr. Ballantyne\'s own words, as close as possible, just what he said? A. Well, he said that such payments were a usual and normal thing; that they were made from Washington on down, and that in order to remain in business competitively that it was simply necessary for him to do that."

Ballantyne was next subpoenaed to appear before a federal grand jury at Houston, Texas, on September 28, 1955. Before the grand jury, he gave his business and social background and testified that he had no other source of income except Balco, Inc. The United States Attorney then asked him,

"Q. All right. Have you reported all of that income? A. I have, yes.

* * * * * *

"Q. Have you ever received any little gratuities on the side, any side pocket payments that went into your pocket, of a hundred dollars or more, which were not turned over to your accountant and to the best of your knowledge reported on your income tax return? A. Not that I know of."

Appellant was then confronted with most of the deposit slips and checks which disclosed the cash withdrawals. He then declined to testify whether he kept the cash withheld for his own personal use, or what disposition he made of it, invoking the Fourth and Fifth Amendments "on the ground that there is a possibility that it might incriminate me under the federal laws." When the United States Attorney undertook to require him to be definite as to what crime he might be prosecuted for, appellant replied,

"Well, all right, there is one thing, that one of the federal revenue men did threaten to hold me responsible for all this money, and prosecute me on income tax evasion. * * * Well, it is just the — just the federal laws of perjury. There\'s ten million of them. You just stated that there are shelf after shelf of books on it. I don\'t know; I am an engineer, I am not a lawyer."

He also declined to testify concerning his interview with Internal Revenue Agent Taylor and his subsequent examination before the special agent of the Intelligence Division of the Internal Revenue Service. He admitted that Balco, Inc. had performed 12 to 15 contracts with Pasadena, the gross amounts of which varied from $2,000.00 to $300,000.00, and two contracts with LaPorte and that the checks to Balco, Inc. were transmitted to him and that he handled the depositing of the checks.

Chief Judge Magruder for the First Circuit has well pointed out that "The Congress has not made it a separate and distinct offense for a witness before a grand jury to refuse to answer any question pertinent to the matter under inquiry. * * * the grand jury must depend upon the court to punish contumacious witnesses. The criminal contempt, if it be one, is contempt of the authority of the court." Carlson v. United States, 1 Cir., 209 F.2d 209, 212, 213.

Accordingly, the United States Attorney reported to the court that the appellant had refused to answer the questions and requested that the court order him to make answers. At the request of the appellant's attorney, the court postponed the hearing on that request until the following day, September 29, 1955, at which time the proceedings before the grand jury had been transcribed. After a very full and patient hearing at which appellant's counsel introduced the testimony of the Internal Revenue agents, disclosing substantially the facts which have already been recited, the court directed appellant to return to the grand jury and answer the questions.¹

Accordingly, on the succeeding day, September 30, 1955, appellant was again sworn as a witness before the grand jury and several of the questions propounded to him on his previous examination were again asked him, each of which he refused to answer on the ground that the answer might tend to incriminate him, invoking the Fifth Amendment. The United States Attorney then asked him, "If I went through and asked you those same exact questions verbatim as are shown in the transcript filed in the Court, would you continue to invoke the Fifth Amendment." Appellant replied, "I refuse to answer the question on the grounds...