People v. Smith

• Decision Date: 17 May 1984
• Citation: 203 Cal.Rptr. 196,155 Cal.App.3d 1103
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE, Plaintiff and Respondent, v. C. Arnholt SMITH, Defendant and Appellant. D000076. Crim. 11314.

Page 196

203 Cal.Rptr. 196

155 Cal.App.3d 1103

The PEOPLE, Plaintiff and Respondent, v. C. Arnholt SMITH, Defendant and Appellant.

D000076.

Crim. 11314.

Court of Appeal, Fourth District, Division 1, California.

May 17, 1984.

Hearing Denied Aug. 15, 1984.

Page 206

Simon & Sheridan, Thomas P. Sheridan, Douglas A. Simon, Los Angeles, Horvitz & Levy, Ellis J. Horvitz, Greines, Martin, Stein & Richland, Beverly Hills, Alan G. Martin and Kent L. Richland, Encino, for defendant and appellant.

George Deukmejian and John K. Van de Kamp, Attys. Gen., Jay M. Bloom, John W.

Page 207

Carney and Lillian L. Quon, Deputy Attys. Gen., for plaintiff and respondent.

DRUMMOND, Associate Justice. ^*

C. Arnholt Smith (defendant) appeals his conviction in May 1979, after a 118-day trial ¹ of two counts of tax fraud for the year 1971 (counts 1 and 2; Rev. & Tax Code, §§ 19405 and 19406, respectively), two counts of tax fraud for the year 1973 (counts 3 and 4; Rev. & Tax Code, §§ 19405 and 19406, respectively) and one count of theft in 1973 (count 5; Pen.Code, § 487.1). This already lengthy opinion will not be protracted by stating the facts twice; the relevant facts are presented below in connection with the arguments involving them.

First, the law regarding the defense of discriminatory prosecution is considered with particular attention to the proper standard of proof. Second, we consider what type of theft it may be when the beneficial owner of a corporation obtains payment from the corporation in exchange for assets which are never delivered to the corporation. Finally, we address the state tax crimes.

I

DISCRIMINATORY PROSECUTION

No finding of discriminatory prosecution has ever barred a conviction in a California criminal proceeding, ² although claims of discriminatory prosecution have led to grants of discovery motions to support the defense. ³ The success that has been achieved by raising this defense, other than by obtaining discovery, post-Murgia, has occurred in People v. Serna (1977) 71 Cal.App.3d 229, 139 Cal.Rptr. 426, and People v. Hertz (1980) 103 Cal.App.3d 770, 163 Cal.Rptr. 233. In Serna, the convictions of defendants for a criminal violation of the Education Code for wilfully refusing to send their children to public schools were reversed because the trial court failed to grant requested discovery as to how many

Page 208

                other violators there were in the school district (71 Cal.App.3d at pp. 233-235, 139 Cal.Rptr. 426).   In Hertz, a Penal Code section 995 motion was granted, in part, because the magistrate at the preliminary hearing had denied a defendant the opportunity to develop evidence of discriminatory enforcement by cross-examination of police officer witnesses (103 Cal.App.3d at pp. 775-777, 163 Cal.Rptr. 233).   More important to that ruling as to that defendant and the others involved in Hertz appears to be the holding 995 motions were granted properly because the magistrate conducted an extension in camera review of documents to determine whether they were privileged from discovery under Evidence Code section 1040 without creating a reviewable record of the in camera proceedings (103 Cal.App.3d at pp. 777-780, 163 Cal.Rptr. 233)
                

In our case, the trial court, pursuant to Murgia, supra, 15 Cal.3d 286, 124 Cal.Rptr. 204, 540 P.2d 44, as interpreted by Bortin, supra, 64 Cal.App.3d 873, 135 Cal.Rptr. 30 (then the most recent governing case), heard arguments and evidence on a pretrial motion to dismiss the prosecution on the basis of discriminatory enforcement over the course of ten days between March 1 and March 16, 1977. Defendant does not contend he was denied an opportunity to conduct sufficient discovery, but he does disagree with the court's finding of no discriminatory prosecution and contends the finding followed from imposition of the wrong burden of proof.

Burden of Proof

"It is presumed that official duty has been regularly performed." (EVID.CODE, § 664.)⁴ This rebuttable presumption affects the burden of proof (§ 660). "The effect of a presumption affecting the burden of proof is to impose upon the party against whom it operates the burden of proof as to the nonexistence of the presumed fact." (§ 606.)

This presumption is employed in assessing the defense of discriminatory prosecution to impose the burden of proof on the defendant. (Murgia, supra, 15 Cal.3d 286, 305, 124 Cal.Rptr. 204, 540 P.2d 44; Hartway, supra, 19 Cal.3d 338, 348, 138 Cal.Rptr. 66, 562 P.2d 1315; Sperl, supra, 54 Cal.App.3d 640, 657, 126 Cal.Rptr. 907; Street, supra, 89 Cal.App.3d 739, 748, 153 Cal.Rptr. 69; see In re Elizabeth G., supra, 53 Cal.App.3d 725, 733, 126 Cal.Rptr. 118; Lyons, supra, 75 Cal.App.3d 829, 844, 142 Cal.Rptr. 449; Battin, supra, 77 Cal.App.3d 635, 666, 143 Cal.Rptr. 731.) People v. Gray (1967) 254 Cal.App.2d 256, at page 265, 63 Cal.Rptr. 211, appears to have been the first case to observe the impact of section 664 on establishing the defense of discriminatory prosecution and it has been cited as imposing the burden of proof on the defendant. (Murgia, supra, 15 Cal.3d at p. 305, 124 Cal.Rptr. 204, 540 P.2d 44; Hartway, supra, 19 Cal.3d at p. 348, 138 Cal.Rptr. 66, 562 P.2d 1315; Sperl, supra, 54 Cal.App.3d at p. 657, 126 Cal.Rptr. 907; Lyons, supra, 75 Cal.App.3d at p. 844, 142 Cal.Rptr. 449; Street, supra, 89 Cal.App.3d at p. 748, 153 Cal.Rptr. 69.)

Interestingly, none of the cases which followed Gray (254 Cal.App.2d 256, 63 Cal.Rptr. 211) in evaluating a discriminatory prosecution claim in light of section 664 have elaborated on what is the standard of proof. Perhaps this is because the defense should be raised on a pretrial motion to dismiss (Murgia, supra, 15 Cal.3d 286, 293-294, fn. 4, 124 Cal.Rptr. 204, 540 P.2d 44; Hartway, supra, 19 Cal.3d 338, 348, 138 Cal.Rptr. 66, 562 P.2d 1315; Sperl, supra, 54 Cal.App.3d 640, 656-657, 126 Cal.Rptr. 907; cf. Hertz, supra, 103 Cal.App.3d 770, 774, 163 Cal.Rptr. 233), and the trial court need not instruct itself on the law to be applied. The burden has been characterized as a "heavy" one. (Battin, supra, 77 Cal.App.3d 635, 668, 143 Cal.Rptr. 731; Milano, supra, 89 Cal.App.3d 153, 156, 152 Cal.Rptr. 318.) We assume this characterization is employed only because the defense has been a difficult one to establish (see Gray, supra, 254 Cal.App.2d 256, 265-266, 63 Cal.Rptr. 211).

Page 209

Gray, 254 Cal.App.2d 256, at pages 265 to 267, 63 Cal.Rptr. 211, established the standard of proof is not the high one of "clear and convincing," but the lesser one of proof "by a preponderance of the evidence." We have no hesitation in reaffirming that analysis for the reasons given there and for other reasons. The Attorney General argues Gray was wrong and the higher standard is applicable in order to effectuate the policy behind section 664. It is true the presumption of official regularity has been "established to implement some public policy other than to facilitate the determination of the particular action in which the presumption is applied" (§ 605). Similarly, it is true the policy served is to relieve governmental officials from having to justify their conduct whenever it is called into question. The Attorney General seems to assume that unless a very high standard of proof is imposed, it will be too easy to show the governmental officials are not doing their jobs properly. This contention is without merit, particularly when the policy served by section 664 is weighed against the constitutional concern for equal protection which has given rise to the defense of discriminatory prosecution. (See Gray, supra, 254 Cal.App.2d 256, 266, 63 Cal.Rptr. 211.)

Section 115 explains:

" 'Burden of proof' means the obligation of a party to establish by evidence a requisite degree of belief concerning a fact in the mind of the trier of fact or the court. The burden of proof may require a party to raise a reasonable doubt concerning the existence or nonexistence of a fact or that he establish the existence or nonexistence of a fact by a preponderance of the evidence, by clear and convincing proof, or by proof beyond a reasonable doubt.

"Except as otherwise provided by law, the burden of proof requires proof by a preponderance of the evidence."

The Attorney General contends section 115 does not apply at all, because section 664 creates a rebuttable presumption affecting the burden of proof. Our understanding, however, is if there is a preponderance of evidence demonstrating the nonexistence of official regularity, the presumption of section 664 is rebutted. The Assembly Committee comment on section 606 explains: "In the ordinary case, the party against whom it is invoked will have the burden of proving the nonexistence of the presumed fact by a preponderance of the evidence. Certain presumptions affecting the burden of proof may be overcome only by clear and convincing proof." The presumption created by section 662 is an example of a presumption which is rebutted only by a clear and convincing showing, while section 664 is not (Gray, supra, 254 Cal.App.2d 256, 266, fn. 12, 63 Cal.Rptr. 211).

Accepting this standard of proof for the defense of discriminatory prosecution, the next question is whether the trial court imposed the wrong burden. Apparently pursuant to an agreement among the court and the parties, the trial court ruled orally at the conclusion of the many pretrial motions on the understanding that the rulings would be memorialized later. Thus, the court ruled orally on March 16, 1977, denying the motion to dismiss for discriminatory prosecution, while the written ruling followed on May 30, 1978.

The written ruling states pertinently: "The burden the defendant bears in making such claim is not made clear by the cases, but the court holds it must be a relatively substantial showing, perhaps a showing by clear and convincing evidence." The oral ruling was not as specific in identifying the standard of proof. The court stated: "Now, I'm not just sure what...