Edwards v. United States

• Decision Date: 23 September 1964
• Docket Number: No. 19827,19828.,19827
• Citation: 334 F.2d 360
• Parties: Albert EDWARDS, Appellant, v. UNITED STATES of America, Appellee. S. Frank EDWARDS, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

334 F.2d 360 (1964)

Albert EDWARDS, Appellant, v. UNITED STATES of America, Appellee.

S. Frank EDWARDS, Appellant, v. UNITED STATES of America, Appellee.

Nos. 19827, 19828.

United States Court of Appeals Fifth Circuit.

July 10, 1964.

Rehearings Denied September 23, 1964.

COPYRIGHT MATERIAL OMITTED

Dick Lee, Sarasota, Fla., for appellant.

Arnold D. Levine, Joe H. Mount, Thomas J. Hanlon, III, Asst. U. S. Attys., Tampa, Fla., for appellee.

Before TUTTLE, Chief Judge, and RIVES, JONES, BROWN, WISDOM, GEWIN and BELL, Circuit Judges.^*

RIVES, Circuit Judge.

The defendants, Albert Edwards and S. Frank Edwards, were convicted of violating 26 U.S.C. § 7203 by willfully failing to register for and pay the gambling tax as required by 26 U.S.C. §§ 4411, 4412.¹ On appeal, this Court by a majority vote reversed the judgments of conviction for lack of proof that the defendants had knowledge of the law. 321 F.2d 324. The case is now before the Court en banc on a petition for rehearing filed by the United States.²

The crucial questions presented are: (1) Was there sufficient evidence that defendants willfully failed to register for and pay the gambling tax? (2) Was the district court's charge³ that the defendants are presumed to have known the law erroneous? (3) If the charge as given was erroneous, was it such "plain error" as to call for a reversal?⁴ We answer the first question in the affirmative, the second in the negative but with a slight reservation on the charge as given, and the third in the negative. The result is that we affirm the judgments of conviction.

The defendants were allegedly engaged in a lottery operation, called Cuba or bolita, conducted from a house admittedly owned by defendant Frank Edwards. A search of the house under a search warrant disclosed the paraphernalia used in such lottery operations: memo pads, adding machine tapes, tally sheets or recap sheets of sellers or pickup men, cards used to notify buyers of the winning number, a short-wave radio, and a telephone listed in the name of Frank Edwards. A qualified expert on bolita operations testified to the necessity of keeping on hand a large amount of cash. When Frank Edwards was arrested at the Green Palace Bar, which is in front of the house from which the lottery was conducted, he had in his pocket $71.47 and in a bag on his person $1,091.47. There was considerable testimony about a five-gallon can which Frank Edwards had on occasions carried. The can filled with various lottery paraphernalia was found under the house next door to that from which the operations were conducted. Frank Edwards had been observed meeting various persons in the parking lot behind the Green Palace Bar and accepting packages from them; he had been observed going in and out of the house where the lottery was conducted. He was also seen carrying paper sacks under his shirt and retrieving sacks left for him in the mail box.

Two paid informers had purchased bolita tickets from Albert Edwards in the Green Palace Bar, and had seen other persons making similar purchases from him. Frank Edwards at the time of his arrest admitted ownership of the house, but claimed that it was rented out, although he refused to reveal to whom it was rented. Frank had been arrested for a bolita offense in 1949. Both defendants testified at the trial and denied being in the bolita business. Neither of the defendants stated whether or not he was aware of the duties imposed by the gambling tax.

The majority of the original panel took the Government's position to be that ignorance of the law is no defense in a prosecution for willful failure to register for and pay the federal wagering tax. Accordingly, the majority opinion was primarily concerned with showing that "willfulness" requires knowledge of the law. The concurring opinion⁵ and footnote 3 of the majority opinion⁶ indicated that the Government has the burden of proving knowledge and that there is no presumption that the defendants knew of the wagering tax requirements. The dissent⁷ contended that some presumption of knowledge does exist.

On petition for rehearing the Government has conceded that since the misdemeanor includes the element of willfulness ignorance of the law is a defense, but contends that there was no evidence of such ignorance and there was sufficient evidence that the defendants knew the law so as to support the jury verdicts. In reviewing the sufficiency of the evidence, this Court must view the evidence in the light most favorable to the prosecution and permissible inferences supporting its case must be so drawn. Accordingly, the first issue to be decided is whether there is evidence from which the jury could have inferred beyond a reasonable doubt⁸ that the defendants had knowledge of the duties imposed upon them by the wagering tax statutes. If so, since the evidence conclusively establishes that the defendants failed both to register for and to pay the tax, the test of willfulness is met. As said in Spies v. United States, 1943, 317 U.S. 492, 497, 498, 63 S.Ct. 364, 367, 87 L.Ed. 418:

"The difference between willful failure to pay a tax when due, which is made a misdemeanor, and willful attempt to defeat and evade one, which is made a felony, is not easy to detect or define. Both must be willful, and willful, as we have said, is a word of many meanings, its construction often being influenced by its context. United States v. Murdock, 290 U.S. 389 54 S.Ct. 223, 78 L.Ed. 381. It may well mean something more as applied to nonpayment of a tax than when applied to failure to make a return. Mere voluntary and purposeful, as distinguished from accidental omission to make a timely return might meet the test of willfulness. But in view of our traditional aversion to imprisonment for debt, we would not without the clearest manifestation of Congressional intent assume that mere knowing and intentional default in payment of a tax where there had been no willful failure to disclose the liability is intended to constitute a criminal offense of any degree. We would expect willfulness in such a case to include some element of evil motive and want of justification in view of all the financial circumstances of the taxpayer." (Emphasis supplied.)

In the instant case there is no direct proof that the defendants knew of the duties imposed by the federal gambling tax statute — they neither admitted nor denied such knowledge, and there was no evidence that they had been warned of their obligation or that they had previously paid the tax. But knowledge of the law, a state of mind, may be proved by circumstantial evidence.⁹

What circumstantial evidence will permit an inference of knowledge in wagering tax cases? We believe the answer lies in Ingram v. United States, 1959, 360 U.S. 672, 79 S.Ct. 1314, 3 L.Ed.2d 1503. In that case two defendants, Ingram and Jenkins, were convicted of conspiring to evade and defeat the wagering tax and of willfully failing to register for and pay the tax. Two other defendants, Smith and Law, although not required by law to pay the tax since they were neither "writers" nor "bankers," were nevertheless convicted of conspiracy to attempt to evade or defeat the tax. The defendants had been engaged in a closely organized and large-scale operation of a numbers game in violation of state law from 1954 to 1957. They made every effort to conceal the operation — e.g., they used false license plates, evasive routes, and false names and even attempted bribes. The Supreme Court noted: "There was no direct evidence to show that any of the petitioners knew of these taxes."¹⁰ The Court held that there was sufficient evidence to support the convictions of Ingram and Jenkins. As to Smith and Law, the Court held that there was no evidence to indicate that they knew that Ingram and Jenkins had not paid these taxes, and without such knowledge Smith and Law could not have conspired to evade the tax. A minority of the Court dissented as to Ingram and Jenkins, being of the opinion that mere concealment should not be enough to infer knowledge that a tax is imposed.¹¹

In the instant case, the defendant Frank Edwards was arrested for a bolita offense as far back as 1949.¹² He purportedly had rented the house to someone else; whereas, in fact, he used it to carry out his gambling operation. He accepted packages at night in the parking lot behind the bar, hid the can containing lottery paraphernalia under the house next door, carried paper sacks under his shirt, and retrieved paper sacks left for him in the mail box.¹³ This long experience in the lottery business and concealment of operations is enough under the Ingram case to allow the jury to infer that Frank Edwards was aware of the wagering tax.¹⁴

While the circumstantial evidence against Albert is not as strong as that against Frank, Albert was a "writer" and is Frank's son, so that the jury could reasonably infer that Albert knew of the law himself or that Frank passed this knowledge on to him. As to Albert, however, a close question is presented as to whether this inference could be drawn beyond a reasonable doubt as required by Riggs, n. 8, supra, and we prefer to base our decision on our holding, hereafter elaborated, that the evidence from which the jury might draw the inference of knowledge of the law is aided or supplemented by a rebuttable presumption that the defendants knew the law.

In determining the correctness vel non of the court's charge, n. 3, supra, it is important to note the distinction between an "inference" and a "presumption." Professor Morgan has defined an inference as follows:

"If the court means that when basic fact A is established in the action, the existence of presumed fact B may be deduced by the operation of the ordinary rules of reasoning, it sometimes says that the trier of fact may presume the existence of B if it finds A. The presumption is said to be one of fact, and careful judges and writers insist that the proper term is `

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