Blackwell v. United States

• Decision Date: 07 May 1957
• Docket Number: No. 15552.,15552.
• Citation: 244 F.2d 423
• Parties: Homer L. BLACKWELL, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

244 F.2d 423 (1957)

Homer L. BLACKWELL, Appellant, v. UNITED STATES of America, Appellee.

No. 15552.

United States Court of Appeals Eighth Circuit.

May 7, 1957.

COPYRIGHT MATERIAL OMITTED

James J. Waters, Kansas City, Mo., for appellant.

William O. Russell, Asst. U. S. Atty., Kansas City, Mo. (Edward L. Scheufler, U. S. Atty., Kansas City, Mo., was with him on the brief), for appellee.

Before WOODROUGH, VOGEL, and VAN OOSTERHOUT, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal from judgment imposing sentences upon defendant after his conviction by a jury upon all counts of a 4-count indictment. Each count of the indictment charged defendant with filing a fraudulent income tax return with willful intent to evade income tax due, in violation of section 145(b), 26 U.S.C. Count I charged that defendant filed a false income tax return for 1948, wherein his stated income was $2,391.54 and the tax due thereon was $98.20, whereas, as defendant well knew, his net income was $18,270.83, upon which he owed an income tax of $3,550.48. Count II charged that defendant filed a false income tax return for 1949, wherein he stated that he suffered a loss of $10,603.41 and that no tax was due thereon, whereas, as defendant well knew, his net income was $3,651.91, upon which he owed an income tax of $407.02. Count III charged that defendant filed a false income tax return for 1950, wherein his stated income was $313.60 and no tax was due thereon, whereas, as defendant well knew, his net income was $10,993.21, upon which he owed an income tax of $1,921.08. Count IV charged that defendant filed a false income tax return for 1951, wherein his stated income was $6,819.31 and the tax due thereon was $1,178.72, whereas, as defendant well knew, his net income was $16,657.65, upon which he owed an income tax of $3,829.30.

During the years involved in the indictment defendant was the sole proprietor of a wholesale furniture business at Kansas City, Missouri, and during such years this business was his only source of income except for a modest amount of interest and dividends. Defendant's records consisted of an inventory file; a record of charge sales showing purchaser, amount of payment, date paid, and discount allowed; check stubs; cancelled checks; bank statements; and a "little black book." Any merchandise not sold on credit was treated as a cash sale whether paid for in currency or by check. The only record of cash sales preserved was a monthly total entered in the little black book. Originally there was an order, invoice, or notation with reference to cash sales. After the monthly total of cash sales was taken and entered in the little black book, such records were destroyed. There was no safe in the office so any currency received was handled and taken care of by defendant.

The internal revenue agents investigating defendant's returns determined that the defendant's records did not properly reflect his income, and proceeded to determine defendant's net income for the indictment years by the net worth method. The revenue agents also offered proof to the effect that the bank deposits during the period under investigation exceeded defendant's reported receipts.

Defendant contends his books properly reflect his income and that he has fully reported his income and paid the tax due thereon. His explanation of the net worth increases claimed by the Government, and the excess of deposits over receipts, is that he had since 1936 a hoard of cash of $80,000 to $100,000, and that this was put into the business as needed.

Defendant was born in 1900. In explanation of his cash hoard he testified that he started earning money when he was in high school, at which time he was engaged in the "jitney" business, and that he engaged thereafter in various enterprises, including a trucking business, an oil business, a theatre operation, an advertising business, a printing business, and a poster business. He concedes that a number of said ventures were not too successful, and claims his greatest success in the poster business in which he was engaged from about 1926 to 1940. He contends that by 1936 he had accumulated between $80,000 and $100,000 in currency which he kept in a bank deposit box, and that the hoard was still available on December 31, 1947.

In determining defendant's opening net worth, the Government did not credit him with the cash hoard claimed, but gave him credit only for such cash and bank deposits it was able to verify as being on hand on December 31, 1947.

Defendant asserts that the court committed prejudicial error entitling him to reversal in the following respects:

1. Overruling defendant\'s motion for bill of particulars.

2. Overruling defendant\'s motion for judgment of acquittal at the close of all the evidence and again overruling such motion when it was renewed after verdict.

3. Errors in admission of Government evidence.

The errors asserted will be considered in the order stated.

In his pre-trial motion for a bill of particulars, which the court overruled, defendant asked that the Government be required to say whether it claimed understatement of "gross income" and, if so, the items thereof, and when, where and by whom, and in what manner, paid to defendant; that the Government be required to say whether it claims overstatement or duplication of deductions and expenses and, if so, to state the amount, items, classes or types, and the dates thereof; and that the Government be required to say whether its determination of defendant's "net income" for the years in question, is based upon "the net worth and expenditures method" and, if so, to state the amount of assets owned, and of the liabilities owing by, and the net worth of, defendant on January 1 of each of the four years in question, and that the Government state "in what manner it is claimed" the questioned income tax returns "were false and fraudulent."

The Government, in its suggestions in opposition to this motion, filed about seven months before trial, stated that the additional income in each of the years involved in the indictment had been determined by the net worth method. Thus, defendant had timely notice that the Government was employing the net worth method of computation. The indictment advised the defendant of the amount of income the Government was claiming for each of the years involved.

It is well settled that a motion for bill of particulars is addressed to the sound discretion of the court, and that the court's ruling upon such a motion should not be disturbed in the absence of an abuse of discretion. Wong Tai v. United States, 273 U.S. 77, 82, 47 S.Ct. 300, 71 L.Ed. 545; McKenna v. United States, 8 Cir., 232 F.2d 431, 435. A number of courts have held that in a net worth prosecution the most that defendant is entitled to prior to trial is the disclosure of the theory or method used by the Government to compute net income. Remmer v. United States, 9 Cir., 205 F.2d 277, 281; United States v. Caserta, 3 Cir., 199 F.2d 905, 910; United States v. Chapman, 7 Cir., 168 F.2d 997, 999.

Defendant relies upon Singer v. United States, 3 Cir., 58 F.2d 74. The Singer case is not a net worth case. Taxpayer's business there was very complicated and the facts presented are very unusual. The Singer case is distinguished in the Caserta case, supra, decided by the same circuit, and the Remmer case, supra. Defendant also relies upon United States v. O'Connor, 2 Cir., 237 F.2d 466, 475. There, the court indicates that the rule requiring a bill of particulars should be liberally construed in net worth cases, and in footnote 10 sets out a number of cases in which a bill of particulars was required. The court, however, found it unnecessary to decide whether the trial court had abused its discretion in denying the bill of particulars.

Upon the record in the present case we do not deem it necessary to determine whether the rule for a bill of particulars should be liberally or strictly construed. Even if the rule is to be liberally construed, we are satisfied that the court did not abuse its discretion in overruling the motion for bill of particulars in the present case. We are not persuaded that the defendant was seriously handicapped in his defense by such ruling. The principal issue was whether the defendant was entitled to have his opening net worth increased by the amount of cash which he claimed he had accumulated and hoarded prior to the years here involved. Defendant was fully informed that the Government was proceeding on the net worth theory. He had many interviews with the investigating agents and had every reason to believe that the Government was not accepting his hoard-of-cash claim. At the trial defendant offered a witness from California who claimed to have seen the cash hoard in 1935. Defendant's business was a modest one, wholly owned and controlled by him. His information as to the nature of his assets during the indictment years was at least equal to that of the Government. No prejudicial error was committed in overruling defendant's motion for a bill of particulars.

Defendant made a motion for judgment of acquittal at the close of all the evidence and renewed such motion after verdict. Defendant contends the court erred in overruling these motions. Defendant first argues that the evidence establishes that his records are adequate and that no error in his records has been pointed out, and contends that his income as disclosed by his records must be accepted.

Many of the problems involved in this case are settled by Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150. The situation with reference to the adequacy of taxpayers' books in the Holland case is quite similar to that confronting us here. In Holland the Court states (348 U.S. at pages 131-132, 75 S.Ct. at pages 133-134):

"* * * Petitioners\' accounting system was appropriate for their business purposes; and, admittedly, the Government did not

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