Maxfield v. United States, 10468

• Decision Date: 25 March 1946
• Docket Number: 10469.,No. 10468,10468
• Citation: 152 F.2d 593
• Parties: MAXFIELD et al. v. UNITED STATES. WILTON et al. v. SAME.
• Court: U.S. Court of Appeals — Ninth Circuit

152 F.2d 593 (1945)

MAXFIELD et al. v. UNITED STATES.

WILTON et al. v. SAME.

Nos. 10468, 10469.

Circuit Court of Appeals, Ninth Circuit.

December 14, 1945.

Rehearing Denied January 14, 1946.

Writ of Certiorari Denied March 25, 1946.

A. P. G. Steffes, of Los Angeles, and William S. Boyle, of Reno, Nev., for appellants.

Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key, J. Louis Monarch, Eugene E. Beyer, and Walter M. Campbell, Jr., Sp. Assts. to the Atty. Gen. (Miles N. Pike, U. S. Atty., and Bruce R. Thompson, Asst. U. S. Atty., both of Reno, Nev., of counsel), for appellee.

Before GARRECHT, MATHEWS, and HEALY, Circuit Judges.

Writ of Certiorari Denied March 25, 1946. See 66 S.Ct. 821.

HEALY, Circuit Judge.

Appellants Maxfield and Wilton were jointly charged in two indictments, each of which contained four counts. The first three counts of one indictment charged them with willfully attempting to evade payment of Maxfield's income taxes for the years 1935, 1936, and 1937, in violation of § 145(b) of the Revenue Acts of 1934 and 1936, 26 U.S.C.A. Int.Rev.Code, § 145(b).¹ The companion counts of the other indictment charged a willful attempt on the part of both to evade Wilton's income taxes for those years. The fourth count charged the two with conspiring with each other, each to evade his own as well as his co-defendant's income taxes for the years named, in violation of § 37 of the Criminal Code, 18 U.S.C.A. § 88.

Both were found guilty on all counts and each was given sentences of one year on each count of both indictments, sentences to run concurrently. Each was fined $5,000 on each count of one indictment.

Following is a brief outline of the case as developed on the trial. In 1932 appellants contracted with certain Nevada miners to form the Chiquita Mining Company, which was capitalized at 1,000,000 shares. Appellants received 250,000 shares as a conditional bonus for their services in organizing the corporation, and in addition obtained an option to purchase for $87,500 the stock issued to the miners (250,000 shares). They obtained also an option to purchase the treasury stock (500,000 shares) at 15¢ per share. The miners were paid the agreed sum for their stock, and ultimately this and the bonus stock, together with the treasury stock as acquired, was transferred to Chiquita Mines Syndicate.² The principal source of income during the years in question came from profits on resale for cash and other properties of the bonus stock and the stock acquired from the miners, the profits accruing to the Syndicate being divided equally between appellants.

A second source of profit grew out of an arrangement with persons named Colver by the terms of which certain shares of Kellogg stock were transferred to the Syndicate, the latter in turn agreeing to unwater and open the Herman mine to the satisfaction of the Colvers. The Colvers were to receive some further consideration the precise nature of which need not be detailed. The Kellogg stock was sold in 1935 and 1936 for $250,395.15. A written admission of the defendants was introduced on the trial to the effect that taxable profit in excess of $97,000 was made on this deal.

A third enterprise, claimed by the Government to have resulted in taxable profit, consisted of a series of contracts whereby Maxfield accepted the property of owners in return for his promise to make certain monthly payments for life to the respective grantors. According to a written admission of appellants received in evidence, the amount agreed to be paid was based on the speculative value of the property received and not upon the life expectancy of the grantor.³

On the basis of an examination of such books as appellants had, plus information gleaned from outside sources, a witness for the Government (a tax auditor named Claypoole) testified that for the tax year 1935 appellants had a total net income of $223,707.54. The net income reported by them and their respective spouses was $37,399.26. In the year 1936 the witness testified to a total net income of $135,199.99, whereas the total net reported for that year by the parties was $13,734.90. For 1937 the witness found taxable net income of $94,223.97. Except for a tentative report, appellants filed no tax return for that year.

1. It is contended that there was but one conspiracy shown, whereas appellants were found guilty of two conspiracies, namely, those charged in the fourth counts of the two indictments. We think the contention is probably correct, cf. Braverman v. United States, 317 U.S. 49, 63 S.Ct. 99, 87 L.Ed. 23, where it was held that a single continuous agreement amounting to a conspiracy to commit acts in violation of several sections of the revenue laws is subject to punishment as one rather than as several conspiracies.

The situation does not, however, warrant a reversal. The sentences of imprisonment on the conspiracy counts run concurrently with those imposed on the remaining counts. The $5,000 fine was imposed for violation of but one of the fourth counts, and the penalties exacted were within the maximum prescribed for a single conspiracy. Appellants were in no way prejudiced. Cf. Hirabayashi v. United States, 320 U.S. 81, 85, 63 S.Ct. 1375, 87 L.Ed. 1774.

2. It is claimed that the conspiracy count of each indictment charged the same crime as that described in the first three counts. We think otherwise. The crime of attempting willfully to evade payment of income taxes is a substantive offense. In United States v. Johnson, 319 U.S. 503, 515, 63 S.Ct. 1233, 87 L.Ed. 1546, it was held that all persons who contribute consciously to furthering tax evasion aid and abet the commission of that offense, hence become principals in a common enterprise under § 332 of the Criminal Code, 18 U.S. C.A. § 550. In Tinkoff v. United States, 7 Cir., 86 F.2d 868, certiorari denied 301 U.S. 689, 57 S.Ct. 795, 81 L.Ed. 1346, it was held that though the income tax attempted to be evaded by the accused was that of another, that fact did not exempt him from prosecution for attempted evasion under the provisions of the statute here pertinent. And Lisansky v. United States, 4 Cir., 31 F.2d 846, 67 A.L.R. 67, holds that where co-partners have jointly committed the substantive offense of attempting to evade income taxes, and were so charged, a prosecution for conspiracy to evade was not thereby precluded.

3. It is claimed that the court was in error in denying appellants' motion for a bill of particulars; and Singer v. United States, 3 Cir., 58 F.2d 74, is relied on as authority. In the Singer case the indictment failed to distinguish net from gross income; and the accused were surprised by the government's evidence to the extent that long recesses had to be granted on several occasions. There, also, the books of the accused were in the hands of the government and were withheld from the use of the defense.

No comparable situation existed here. The indictments clearly informed appellants of the annual amount of income on account of which taxes were allegedly evaded; and the figures given were intelligibly broken down. Appellants had their records in their own possession and were in position to analyze the general allegations of the bill. There was no showing or appearance of surprise, nor was any continuance requested while the trial was in progress.

The granting or denial of a bill of particulars is in the sound discretion of the trial court, and if no abuse or prejudice appears its action in denying the application will not be disturbed on appeal. Wong Tai v. United States, 273 U.S. 77, 82, 47 S.Ct. 300, 71 L.Ed. 545; Robinson v. United States, 9 Cir., 33 F.2d 238, 240. The rule has been applied in income tax evasion cases. Cf. Paschen v. United States, 7 Cir., 70 F.2d 491; United States v. Skidmore, 7 Cir., 123 F.2d 604.

4. A major contention advanced is the insufficiency of the evidence to sustain a conviction of either appellant on any of the counts. The point attempted to be made under this head is that the difference between the amounts reported as income and the much larger amounts actually received was not shown to be taxable income.

The largest item said to have been improperly treated is a sum of approximately $134,000 advanced to the Chiquita Mining Company. The argument appears to be that the advances represented deductible operating expenses of the Syndicate, or that they formed part of the acquisition cost of the Chiquita stock. However, the written contract with the Chiquita Mining Company indicates that the advances agreed upon were to constitute loans repayable by the Company out of proceeds from...