Leathers v. United States

• Citation: 250 F.2d 159
• Decision Date: 22 November 1957
• Docket Number: No. 15428.,15428.
• Parties: R. H. W. LEATHERS, Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

250 F.2d 159 (1957)

R. H. W. LEATHERS, Appellant, v. UNITED STATES of America, Appellee.

No. 15428.

United States Court of Appeals Ninth Circuit.

November 22, 1957.

Raymond M. Kell, Clifford B. Alterman, Portland, Or., for appellant.

C. E. Luckey, U. S. Atty., Portland, Or., for appellee.

Before HEALY, POPE and CHAMBERS, Circuit Judges.

POPE, Circuit Judge.

Leathers was convicted upon a charge of violating § 145(b) of the 1939 Internal Revenue Code, 26 U.S.C.A. § 145(b), by knowingly filing a false return for one Russell A. Peterson for the year 1946. Leathers was an accountant and his client, Peterson, was the proprietor of a fish and crab processing plant near North Bend, Oregon, operated under the name of "Peterson's Sea Foods". They had been acquaintances and friends for a number of years and Leathers had on several earlier occasions made out Peterson's income tax returns.

In the Spring of 1947, Leathers at Peterson's request, made out the tax return here in question and Leathers attended to the filing of the return. He also paid the tax shown thereon from funds which he had received from Peterson in the manner hereafter described. Upon the return Leathers signed his own name as the person who prepared the return and he also signed Peterson's name on the line provided for the signature of the taxpayer. The return showed net income of $15,910.05, and a total tax of $4010.25. The indictment charges that this was a false and fraudulent income tax return in that Peterson's net income for the year 1946 was $56,910.05 upon which Peterson owed the United States a tax of $28,977.41, all as the defendant Leathers then and there very well knew.

The evidence showed that the return was false and understated Peterson's income to the extent alleged in the indictment. The respect in which it was false was that in the year in question Peterson's total receipts from sales of merchandise were $277,555.64, while the return understated these receipts by exactly $41,000, and showed total receipts of only $236,555.64.

Peterson's bookkeeper, Barrow, who had acted in that capacity for several years, testified that at the end of 1946, he made a recapitulation of the figures making up the receipts and expenses in a form sufficient to supply the necessary information for the making of a tax return. This recap, he testified, was prepared for the expected use of the accountant and a carbon copy was retained in the office. The carbon copy was introduced as a Government exhibit. It disclosed the gross sales figure mentioned above, and listed in detail the business expenses including wages, taxes, insurance, rent, etc. Its substantial accuracy as a transcript of what was shown on the books is not questioned as the books also were produced at the trial and the Government witnesses verified the accuracy of the recapitulation.

The Government's evidence designed to disclose a wilful falsification of this tax return by Leathers tended to show that he, Leathers, undertook to make this false return as a part of an elaborate scheme to defraud Peterson. Leathers had the complete confidence of Peterson, who was an unlettered man and unfamiliar with the figures of his own books. He told Peterson that his computation of the income and deductions showed that Peterson's income tax for the year 1946 came to "a little over $16,000 Federal and around $4,000 State." Peterson stated that he was short of funds to provide payment of a tax of that amount and Leathers offered to loan him a portion of the required amount. Accordingly Peterson gave Leathers his check for $10,000 and signed notes to Leathers for approximately $10,000 more. However, the federal return made up by Leathers, and not shown to Peterson, stated a total income of $16,410.05, and a total tax of $4,010.25, upon which $600 had been previously paid on declaration of estimated tax. What Leathers then paid on filing this return was only the balance, or $3,410.25.

These deceptions thus resulted in Leathers being able to pocket the difference between the amount paid by him on the taxes (which included something under $1000 paid on State taxes) and the $10,000. In addition to that, Leathers had the notes which Peterson gave him for the supposed loan, and it appears from the testimony elicited on cross-examination of Peterson that because he held these notes, Leathers soon wound up in possession of deeds both to Peterson's business and to his home as well. Peterson had to recover his property through litigation in the Oregon courts.¹ It was not until some time in 1948, when Government agents began interviewing him about the tax return, that Peterson discovered that the $16,410.25 was entered on the return as the net earnings and not as the tax, and that the signature was not his own.

Appellant asserts that his conviction cannot be sustained because of a lack of proof that he wilfully evaded Peterson's taxes. The argument in support of this contention is based upon an assertion that there was no proof that when Leathers made out the Peterson tax return he had possession of the recapitulation of the book accounts for 1946 which the bookkeeper had prepared, or that he had made up the figures in the return from the books themselves.

Barrow, the bookkeeper, testified that he did not personally deliver the recapitulation sheet (Government Exhibit 17 at the trial) to Leathers, although he had prepared it for the use of whoever made up the tax return. Peterson's testimony was that he did not give Leathers information relating to his tax return but that he told Leathers he could procure the necessary information from Mr. Barrow. The argument on behalf of appellant amounts to saying that Leathers could not be charged with knowingly or intentionally understating Peterson's income in the return because it was not specifically proven that the recapitulation sheet was ever given or shown to Leathers.

We are of the opinion that the evidence of a wilful and intentional evasion of a tax was sufficient. In the first place, there is substantial evidence from which the jury could properly infer that Leathers did in fact have the recapitulation sheet, Exhibit 17, when he made up the return. The witness Amos, an intelligence agent in the internal revenue service, testified that when he went to interview Leathers at the office of the latter's attorney, Leathers told him that Peterson had given him some sheets containing data from which to prepare the return, and that he had copied the data on a work sheet. He showed the work sheet to the witness.

An examination of the items of deductions listed by Leathers on the return, show that some 16 of them corresponded precisely with similar items on Exhibit 17, the recapitulation sheet made by Barrow. The jury was warranted in finding that although Peterson testified that he did not hand the recapitulation sheet prepared by the bookkeeper to Leathers, yet Leathers must have come in possession of it before he made the return. If we were to accept appellant's version of the record we would have to assume that the evidence tended to show no more than that Leathers pulled the figures for the return out of the air or drew upon his own imagination. The jury were not required to view the evidence in that light. As previously indicated, the return understated the gross receipts by exactly $41,000 showing $236,555.64, instead of the true amount of $277,555.64. It would tax one's credulity to assert that the figure in the return was arrived at simply by chance.

Other evidence strongly points to the guilty intent. At the time in question Peterson had been drinking heavily and was in no condition to look after his own affairs. Leathers had Peterson's full confidence and in consequence there was an easy opportunity for him to take advantage of that confidence to defraud Peterson through the use of a scheme to understate the income and the tax due and to over-collect from Peterson for the taxes. The circumstances all indicate that he took advantage of this opportunity in carrying out his motive for gain by defrauding both Peterson and the Government. Also significant is the fact that after the Government began investigating the 1946 tax return, Leathers went to Peterson and talked to him at length about the income tax and tried to persuade Peterson to destroy his records.² This is strong evidence of guilt. "It is today universally conceded that the fact of an accused's flight, escape from custody, resistance to arrest, concealment, assumption of a false name, and related conduct, are admissible as evidence of consciousness of guilt, and thus of guilt itself." Wigmore on Evidence, 3d Ed., § 276.

Appellant further argues that Peterson's books were improperly received in evidence and should not have been used against him. There is no substance in this contention. Obviously the books were appropriate for the purpose of showing the true amount of the 1946 income. We have heretofore noted that Leathers was connected with the books because of the circumstance that he must have had access to the recapitulation of the books made by Barrow.

Appellant also says that the court erred in unduly restricting him in cross-examination of the witness Peterson when he was attempting to show bias, prejudice and interest of such witness, and the latter's prior inconsistent conduct. During this cross-examination of Peterson, it was developed that the witness and Leathers had a civil lawsuit which had gone to the Supreme Court in Oregon (see footnote 1, supra), and that following the decision of the Oregon Supreme Court, the litigation was settled by an agreement under which Peterson's business and home were returned to Peterson. It was further developed that the effect of the Oregon court's judgment was that Leathers must account to Peterson. It was also brought out that as a part of the settlement between the two, Peterson paid Leathers approximately $3000 in cash. The defense then sought...