Pendergast v. United States Malley v. United States Cormack v. United States

Decision Date04 January 1943
Docket Number187,Nos. 183,186,s. 183
PartiesPENDERGAST v. UNITED STATES. O'MALLEY v. UNITED STATES. McCORMACK v. UNITED STATES
CourtU.S. Supreme Court

Mr. Ralph M. Russell, of Kansas City, Mo., for petitioner O'malley.

Mr. John G. Madden, of Kansas City, Mo., for petitioner Pendergast.

Mr. James E. Carroll, of St. Louis, Mo., for petitioner McCormack.

Messrs. William S. Hogsett, of Kansas City, Mo., and Herbert Wechsler, of Washington, D.C., for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

Petitioners, together with one Street now deceased, conceived and executed a nefarious scheme in fraud of the federal District Court and in corruption of the administration of justice. The short of it was that petitioners by fraud and deceit and through misrepresentations by attorneys induced the court to issue decrees effectuating a corrupt settlement of litigation. It happened this way:

Several insurance companies doing business in Missouri filed with the Superintendent of Insurance an increase in insurance rates which the Superintendent denied. The insurance companies filed over 130 separate injunction suits against the Superintendent and the Attorney Gen- eral in the federal court to restrain the enforcement of certain statutes of Missouri on the ground of unconstitutionality. A three-judge court was convened which granted motions for interlocutory injunctions on July 2, 1930, whereby the Superintendent and the Attorney General were enjoined, pending final decision, from enforcing the Missouri statutes—on condition, however, that the insurance companies deposit the amount of increase in rates which was collected with a custodian of the court to await the final outcome of the litigation. In September 1930 a special master was appointed who held hearings. During this time the premiums impounded by the court accumulated, until by 1936 they amounted to almost $10,000,000.

The lure of this sizeable amount of other people's money played an important part in the scheme which was hatched.

Street was in charge of the rate litigation for the insurance companies. Pendergast was a 'political boss'. O'Malley was the then Superintendent of Insurance. McCormack was an insurance agent. Of these only O'Malley was a party to the litigation. Street agreet to pay Pendergast a 'fee' of $750,000 to use his influence over O'Malley and obtain a settlement of the litigation which would be satisfactory to the insurance companies. O'Malley was agreeable. McCormack was the go-between. Street made an initial payment of $100,000 in currency which was divided $55,000 to Pendergast, $22,500 to O'Malley, and $22,500 to McCormack. Thereafter an agreement was reached and reduced to writing in form of a memorandum. O'Malley would approve as of June 1, 1930, 80% of the increase in rates which the companies had sought; the parties would appear by their attorneys and join in seeking appropriate orders for distribution of the impounded money; 20% was to go to the policy holders, 50% directly to the insurance companies, and 30% to Street and another as trustees for the insurance companies. The latter were to account to the companies but not to the court or the Superintendent. The memorandum agreement was not disclosed to the court. But on June 18, 1935, the insurance companies filed in each case a motion reciting terms of settlement and praying for an order of distribution. On the next day the insurance companies and O'Malley filed stipulations agreeing that the court should make the order of distribution. Thereafter on June 22, 1935, October 26, 1935 and January 24, 1936, hearings were held in open court on the motions, and briefs were filed. Counsel, who were wholly innocent and acting in good faith, assured the court of the honesty, fairness, and desirability of the settlement. On February 1, 1936, the court acting in reliance on the representations and without a hearing on the merits entered a decree ordering distribution of the impounded funds as prayed in the motions. It also dismissed the bills, reserving jurisdiction, however, for certain purposes.

Petitioners then proceeded further with their corrupt plan. About April, 1936, Street paid $330,000 in currency of which Pendergast received $250,000, O'Malley $40,000 and McCormack $40,000. In the fall of 1936, Pendergast received another $10,000 in cash from Street. That left $310,000 of the $750,000 'fee' unpaid. And so far as appears it was never paid due to the unraveling of facts which led to an exposure of the entire corrupt scheme. For about that time an internal revenue investigation of Street's income tax revenue disclosed that over $400,000 of the funds for which Street was to account as trustee had been paid to unknown persons. This was reported to the Court in February 1939. A grand jury investigation followed in which the rest of the sordid story was unfolded. See United States v. Pendergast, D.C., 28 F.Supp. 601. The Department of Justice caused Pender- gast and O'Malley to be indicted for evasion of income taxes on the amounts of money so received. They pleaded guilty and were fined and imprisoned late in May, 1939. Id. On May 29, 1939, O'Malley's successor filed a motion praying that the decrees of February 1, 1936, be set aside on the basis of those disclosures and that the insurance companies be ordered to restore the funds distributed to them. The court ordered the insurance companies to make restitution; and they did. At the same time the court asked the district attorney whether contempt proceedings should be filed. About a year passed when the court on May 20, 1940, requested the district attorney to institute contempt proceedings against petitioners. An information was filed July 13, 1940. Motions to abate and quash were overruled. D.C., 35 F.Supp. 593. Thereafter answers were filed and a hearing had. Petitioners were adjudged guilty of contempt—Pendergast and O'Malley being sentenced to two years' imprisonment and McCormack being sentenced to probation for two years. D.C., 39 F.Supp. 189. The Circuit Court of Appeals affirmed. 8 Cir., 128 F.2d 676. We granted the petition for certiorari because of the importance in the administration of justice of the problems raised. 317 U.S. 608, 63 S.Ct. 41, 87 L.Ed. —-.

Petitioners press several objections to the judgment below. The chief of these are that the offense was not a contempt under § 268 of the Judicial Code, 28 U.S.C. § 385, 28 U.S.C.A. § 385, as construed by Nye v. United States, 313 U.S. 33, 61 S.Ct. 810, 85 L.Ed. 1172, and that even though it was, the prosecution of it was barred by the three year statute of limitations contained in § 1044 of the Revised Statutes, 18 U.S.C. § 582, 18 U.S.C.A. § 582. We do not reach the first of these questions and need not express an opinion on it. For although we assume arguendo that the Circuit Court of Appeals was correct in holding (128 F.2d at page 683) that the conduct of petitioners was 'misbehavior' in the 'presence' of the court within the meaning of § 268 of the Judicial Code and therefore punishable as a contempt, we are of the opinion that this prosecution was barred by § 1044 of the Revised Statutes.

That section provides: 'No person shall be prosecuted, tried, or punished for any offense, not capital * * * unless the indictment is found, or the information is instituted, within three years next after such offense shall have been committed. * * *' It would seem that the statute fits this case like a glove. If the conduct in question was a contempt, there can be no doubt that it was a criminal contempt as defined by our decisions. See Nye v. United States, supra, 313 U.S. at pages 41—43, 61 S.Ct. at pages 812, 813, 85 L.Ed. 1172, and cases cited. As such it was an 'offense' against the United States within the meaning of § 1044. It was held in Gompers v. United States, 233 U.S. 604, 34 S.Ct. 693, 58 L.Ed. 1115, that a wilful violation of an injunction, likewise punishable as a contempt under § 268 of the Judicial Code, was such an 'offense'. And see United States v. Goldman, 277 U.S. 229, 48 S.Ct. 486, 72 L.Ed. 862. Cf. Ex parte Grossman, 267 U.S. 87, 45 S.Ct. 332, 69 L.Ed. 527, 38 A.L.R. 131. It was said in the Gompers case that those contempts were 'infractions of the law, visited with punishment as such. If such acts are not criminal, we are in error as to the most fundamental characteristic of crimes as that word has been understood in English speech.' 233 U.S. at page 610, 34 S.Ct. at page 695, 58 L.Ed. 1115. That observation is equally pertinent here. Moreover, we can see no reason for treating one type of contempt under § 268 of the Judicial Code differently in this respect from others under the same section. No such difference is discernible from the language of § 1044. Because of that and because of the further circumstance that Congress classified them together in defining the offense in § 268, we can hardly conclude that a distinction between them for purposes of § 1044 should be implied. Furthermore, the fact that this prosecution was by information, the absence of which has been held not fatal under § 1044 (Gompers v. United States supra, 233 U.S. at pages 611, 612, 34 S.Ct. at pages 695, 696, 58 L.Ed. 1115) brings the case squarely within the language of the section.

Certainly the power to punish contempts in the 'presence' of the court, like the power to punish contempts for wilful violations of the court's decrees 'must have some limit in time'. Gompers v. United States, supra, 233 U.S. at page 612, 34 S.Ct. at page 696, 58 L.Ed. 1115. It is urged, however, that there is no limitation on prosecutions for contempts in the 'presence' of the court except as one may be implied from the conclusion of the proceeding in which the contempt arises. But if we are free to consider the matter as open, no reason for that different treatment of contempts in the 'presence' of the court is...

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