Isaacs v. United States

• Citation: 256 F.2d 654
• Decision Date: 27 June 1958
• Docket Number: No. 15964.,15964.
• Parties: Harry H. ISAACS, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

256 F.2d 654 (1958)

Harry H. ISAACS, Appellant, v. UNITED STATES of America, Appellee.

No. 15964.

United States Court of Appeals Eighth Circuit.

June 27, 1958.

Melvin H. Siegel, Minneapolis, Minn. (Leonard, Street & Deinard, Minneapolis, Minn., were with him on the brief), for appellant.

George E. MacKinnon, U. S. Atty., and Kenneth G. Owens, Asst. U. S. Atty., St. Paul, Minn. (Clifford Janes, Asst. U. S. Atty., St. Paul, Minn., was with them on the brief), for appellee.

Before GARDNER, Chief Judge, and WOODROUGH and VAN OOSTERHOUT, Circuit Judges.

GARDNER, Chief Judge.

This appeal is from a judgment finding appellant guilty of contempt of court because of his refusal to answer certain questions originally put to him as a witness before a Federal grand jury. Appellant was subpoenaed to appear before the United States Grand Jury for the District of Minnesota on January 29, 1958. The grand jury was then investigating the possible criminal violation of the Internal Revenue laws by reason of the failure of a person or persons unknown to report as income some $99,000 paid out in cash by the American Iron and Steel Company, of which appellant was president and majority stockholder, during the years 1953 and 1954.

American Iron and Steel Company maintained a special account or cash fund from which it paid suppliers of scrap from time to time in cash. During the period from October 13, 1953, through September 14, 1954, it issued seventeen checks totaling $101,000 made payable to "Cash" and signed on behalf of the company by appellant in two instances and by his son in the others. Some $99,000 of the proceeds of these checks, though charged on the books of the company to purchases and deducted as expenses in the company's Federal income tax returns for the years in question, were not transferred to the special account for scrap purchases and the company's books nowhere reflected to whom the monies were disbursed. Testimony was given before the grand jury that during the course of an audit in 1957 of the company's tax returns for the years ending July 31, 1953, and July 31, 1954, the $99,000 was disallowed as expenses because American Iron and Steel Company and its officers declined to state to whom the monies were paid. An Internal Revenue Agent testified that appellant's son, Fred Isaacs, declined to state to whom the $99,000 was disbursed because the recipients "had not reported it as gross income" on their Federal income tax returns. The company accordingly paid an additional tax for those years. Appellant declined to answer any questions as to the disposition of the $99,000 on the ground that his answers might tend to incriminate him. At this stage of the proceeding before the grand jury the following occurred:

"Q. And has it been called to your attention or do you know whether there were a substantial number of checks between October, 1953 and September, 1954 of checks made out to Cash and cashed by American Iron and Steel Company that were not entered in the account of that special fund? A. I refuse to answer that; I stand on my constitutional rights.

"Q. Now, Mr. Isaacs, you have been a substantial business man in Minneapolis for some years? A. Yes, sir.

"Q. And you consider yourself a man of good reputation in Minneapolis? A. Yes, sir.

"Q. And you recognize and you have always recognized, I presume, that it\'s an obligation of a person to aid and assist the Government and the Courts and their juries in fulfilling their obligations? A. Yes, sir.

"Q. And you consider that you are a person who performs your obligations to people — A. Yes, sir.

"Q. Now, with that in mind, this jury is asking and would like to know if there were such checks during that period? A. Beg pardon?

"Q. If there were checks drawn on that general fund? A. I refuse to answer and stand on my constitutional rights.

"By Mr. MacKinnon:

"Q. Well, what do you mean, Mr. Isaacs? This is very alarming to me. We are not prosecuting you. Your sole ground for claiming that privilege rests upon the fact that you have been guilty of some crime. A. No. I haven\'t, but I\'ve made —

"Q. Well, then, if you have not been guilty of a crime you have to answer the question, because the extent of your constitutional right is to protect yourself from giving evidence against yourself of a crime. There isn\'t any other right that you have to refuse to testify except that. Now, if you have been guilty of a crime and you want to say so on that stand under oath, then you have got a constitutional right to refuse to testify. But frankly, we didn\'t think you had, and that\'s the reason we called you. A. Well, I\'ve taken it up with my attorneys and that\'s their advice, so I have to stand on it.

"Q. Well, you said though that you have not been guilty of any crime. A. As far as I know, no.

"Q. Well, we\'re not prosecuting you for any crime. A. I don\'t know.

"Q. Well, I can tell you that. A. I still stand on my constitutional rights.

"Q. You don\'t have a constitutional right. A. I don\'t?

"Q. No, sir, not to testify unless you\'ve been guilty of a crime. If you have been guilty of a crime, you\'ve got a constitutional right. * * *"

Appellant was further interrogated with reference to various business transactions of and various checks issued by American Iron and Steel Company, to much of which he declined to answer, claiming that his answers might tend to incriminate him.

He was then taken before the District Court accompanied by his attorney, Mr. Siegel, whereupon the United States Attorney moved the court for an order directing appellant to answer certain questions which he had declined to answer before the grand jury and also to answer questions as to the names of the recipients of the $99,000. In the course of the hearing before the court, the court asked the United States Attorney:

"The Court: And from what Mr. Isaacs did state in response to your questioning before the Grand Jury, you are satisfied in your own mind that he is not a recipient of such money?

"Mr. MacKinnon: Well, I wouldn\'t necessarily conclude that completely. But he had made previous statements — I think that is the state of the record, that he had made previous statements, he or other people with the American Iron & Steel — that this money was paid to other people who had not reported it, and for that reason they were going to pay the tax on it and not claim it as a deduction."

Appellant's attorney then inquired of the United States Attorney whether "if any evidence were adduced in the course of this investigation that any of this money got into the hands of either of the Isaacs, the United States Attorney will say now that it won't prosecute?", to which the United States Attorney replied that he would "have to prove it by other evidence than anything he ever gave me or any lead that I ever got from his testimony". The United States Attorney upon being interrogated by the court as to whether he could extend immunity to appellant if he should answer the questions in controversy said:

"Mr. MacKinnon: We can\'t give any immunity except such immunity as he naturally acquires if he does testify under compulsion to some incriminating circumstances." Whereupon the court said:

"The Court: He is testifying under compulsion here, and we have heard the questions read that you want answered. I think there is one additional question that may be all-inclusive, that you may want to ask, and that is, `Will you please name the payees of those checks?\'

"Mr. MacKinnon: That is right.

"The Court: Those are all the questions you have in mind asking him, on which he is fearful of self-incrimination?

"Mr. MacKinnon: That is right.

"The Court: I will say this, Mr. Siegel, that this Court will advise the witness, Mr. Harry H. Isaacs, in open court that he will be directed to answer those questions and that the Court will extend immunity to him in connection with the answers he may make thereto."

Thereupon, the court below ordered that appellant answer certain questions which he had refused to answer before the grand jury and further ordered that "as a condition to the said witness, Harry H. Isaacs, conforming to the direction of the Court in the foregoing respect, that the Court does hereby extend immunity to him in connection with any answer he may give to said questions or for any prosecution by reason of receipt himself or payment to anyone of the monies in question". Whereupon, appellant was brought before the grand jury where he again declined to answer the interrogatories as to the $99,000 or as to who received the same, on the ground that the answers might tend to incriminate him. Appellant was then ordered to appear before the District Court to show cause why he should not be adjudged in contempt of court for failure to answer as ordered. After hearing the court found appellant guilty as charged and sentenced him to thirty days imprisonment. Further facts in connection with the proceedings before the court and grand jury will be developed in the course of this opinion.

On this appeal appellant in substance contends that: (1) under the Fifth Amendment a witness may decline to answer questions before a grand jury if the answers may possibly tend to incriminate him, (2) appellant's assertion that he was not guilty of any Federal offense did not deprive him of any right to invoke the protection of the Fifth Amendment, (3) the fact that the United States Attorney asserted that he was not investigating or prosecuting appellant did not preclude any possibility that appellant's answers to the questions involved might tend to incriminate him or deprive him of his privilege not to answer under the Fifth Amendment, and (4) the court below was without power to grant appellant immunity from prosecution.

The Fifth Amendment to the United States Constitution provides that no person shall be compelled in any criminal case to be a witness against himself and one called as a witness before a grand jury may in...