Sanders v. Freeman

• Decision Date: 07 March 2000
• Docket Number: No. 98-6512,98-6512
• Parties: (6th Cir. 2000) FRANKLIN SANDERS, PETITIONER, v. WILLIAM E. FREEMAN, JR. AND CHARLES BURSON, RESPONDENTS. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 846

221 F.3d 846 (6th Cir. 2000)

FRANKLIN SANDERS, PETITIONER, v. WILLIAM E. FREEMAN, JR. AND CHARLES BURSON, RESPONDENTS.

No. 98-6512

U.S. Court of Appeals, Sixth Circuit

Argued: March 7, 2000

Decided and Filed: July 19, 2000

Appeal from the United States District Court for the Western District of Tennessee at Memphis. No. 96-02698--Julia S. Gibbons, Chief District Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Edwin Vieira, Jr. (argued and briefed), Manassas, Virginia, Edward Witt Chandler (briefed), Mountain Home, Arkansas, for Appellant.

Ellen H. Pollack (argued and briefed), Assistant Attorney General, Criminal Justice Division, Nashville, Tennessee, for Appellees.

Before: Boggs and Cole, Circuit Judges; and Zatkoff, District Judge^*.

OPINION

Boggs, Circuit Judge.

The petitioner, Franklin Sanders, is a businessman who, prior to his conviction, worked as a retail dealer in Memphis, Tennessee selling gold and silver coins and bullion for cash. He sought a writ of habeas corpus following his conviction for unlawfully depriving the State of Tennessee in its collection of sales tax revenues. The district court denied Sanders's petition and granted summary judgment for the state. We affirm.

I.

The following excerpt from the Tennessee Supreme Court's opinion affirming Sanders's conviction accurately summarizes the facts giving rise to his indictment.

In 1986, the [Tennessee] Department of Revenue discovered that [Sanders], who was not registered with the Department as a "dealer" [of coins and precious metals] under the sales tax statute, was advertising as a dealer in gold and silver bullion and coins and precious metals. The Department also discovered that the state of Arkansas had obtained a judgment against [Sanders] for sales tax owed on the sale of gold and silver coins and bullion at his place of business in West Memphis, Arkansas. While engaged in business in West Memphis, [Sanders] placed an advertisement in a Memphis newspaper, which stated: "[i]f you're a Memphis buyer, you save six percent sales tax on any purchase mailed to Tennessee." Soon after the state of Arkansas obtained its judgment for $66,223.51 for sales tax due, [Sanders] moved his business to Memphis, where he operated under various trade names including "Franklin Sanders Moneychangers" and "Money for Metals."

In July 1986, an agent of the Department purchased several bars of silver from [Sanders] at his place of business in Memphis. [Sanders] did not file a monthly sales tax return for the month of July. In September 1986, when the agent bought several more bars of silver from [Sanders], he asked [Sanders] if sales tax was due on the transaction. [Sanders] responded that no sales tax was due because the defendant was purchasing the agent's Federal Reserve notes with silver. As a record of each transaction, [Sanders] gave the agent a "trade confirmation," which stated:

[O]ur business legally is buying notes and paying for them in gold and silver. Our acceptance of Federal Reserve notes (the green paper you carry in your billfold) in exchange for gold and silver money is a function of our common law 'moneychanging' only, and is not an admission on our part, expressly or implicitly, that we recognize them as lawful or constitutional money.

A search of [Sanders's] business premises on September 18, 1986, by Revenue Department agents produced evidence of transactions in which the defendant had [been] paid a total of $945,610.69 for U.S. gold coins, U.S. silver coins, Krugerrands and silver bars. During the search, the agents also found evidence of a letter written by [Sanders] in which he discussed the applicability of the Tennessee sales tax on the transactions. The letter, which was written after the state of Arkansas had obtained its judgment against the defendant, included the following:

George, I realize that Arkansas can register this judgment [sic] in Tennessee and I realize that they may be able to cause me some trouble, but I don't own anything, nothing is in my name, I just have to hope that that is enough protection. As to the good sales tax people in Tennessee, I am no longer selling anything. Relying on the definition of Federal Reserve Notes at 12 U.S.C. 411, I am buying "obligations" and paying for them in lawful gold and silver money. This makes my invoices a bit hard to explain to my customers, but I think it will keep the State of Tennessee at bay.

State v. Sanders, 923 S.W.2d 540, 542 (Tenn. 1996).

Based on the facts recited above, on September 19, 1989, a grand jury issued a two-count indictment charging Sanders with (1) delaying the State by design in the collection of its lawful revenue from December 1, 1983, through November 1, 1986, and (2) depriving the State by design of the realization of its lawful revenue for the same period, both in violation of Tennessee Code Annotated (TCA) § 67-1-1440(d). The indictment alleged that, during the period charged, Sanders was selling gold and silver coins and bullion in Memphis without collecting sales tax as required by the Tennessee Code.

A jury convicted Sanders on both counts of the indictment, and a sentencing hearing was held on June 18, 1992. The trial court sentenced Sanders to one year of incarceration and ordered him to pay the state $73,000 in restitution. The court then suspended all but thirty days of the sentence, placed Sanders on probation for six years, and ordered him to complete 1000 hours of community service. The Tennessee Court of Criminal Appeals affirmed Sanders's conviction for depriving the State of revenue, but reversed his conviction for delaying the collection of revenue exceeding $5,000 on the grounds that the delaying conviction constituted double jeopardy. State v. Sanders, 1994 WL 413465 (Tenn. Crim. App. 1994).

The Tennessee Supreme Court granted Sanders's application for review and, on May 28, 1996, issued an opinion affirming his conviction and sentence as amended by the court of appeals. In its opinion, the Tennessee Supreme Court specifically held that the sale of gold and silver coins and bullion for their intrinsic value as metals, rather than for their representative values as currency, constitutes a taxable sale of "tangible personal property" under Tennessee law. See State v. Sanders, 923 S.W.2d at 543. The court further held that Sanders's conviction did not violate due process, finding that, as a matter of law, the Tennessee sales tax provision gave him "fair warning" that the transactions to which he was a party were subject to state sales tax. See ibid.

Having exhausted all opportunities for review in the state courts, Sanders filed his petition for a writ of habeas corpus in the district court. The state filed a motion for summary judgment along with various supporting documents and, after considering Sanders's responses and cross-motions, the district court granted the state's motion on November 24, 1997. Sanders's motion for rehearing, which the district court construed as a Rule 59(e) motion to alter or amend the judgment, was denied and Sanders filed a timely notice of appeal to this court. On appeal, Sanders raises seven assignments of error in which he challenges various aspects of his conviction and sentence.

II.

Section 2254 of Title 28 of the United States Code creates a right to petition a federal district court for habeas corpus relief from a state conviction. Section 2254(a) provides that a petitioner may seek habeas relief if he is "in custody in violation of the Constitution or laws or treaties of the United States." Because Sanders was in custody at the Shelby County Correctional Center in Memphis, Tennessee when he filed his petition for habeas corpus on July 8, 1996, this court has jurisdiction over this case even though Sanders was not in custody at the time he filed this appeal. See Carafas v. Lavelle, 391 U.S. 234, 237 (1968) (stating that "[t]he federal habeas corpus statute requires that the applicant must be 'in custody' when the application for habeas corpus is filed" and holding that, because jurisdiction over a habeas corpus action attaches at the time the petition is filed, the petitioner's incarceration at the time he filed his petition in the district court established federal jurisdiction over his habeas case despite his subsequent unconditional release from custody); DePompei v. Ohio Adult Parole Auth., 999 F.2d 138, 140 (6th Cir. 1993) (holding that the court had jurisdiction over a petitioner who was on parole, a form of custody, when he filed his habeas petition in the district court).

Standard of Review

This court reviews de novo the district court's grant of summary judgment for the state. See Terry Barr Sales Agency, Inc. v. All-Lock Co., Inc., 96 F.3d 174, 178 (6th Cir. 1996). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. Proc. 56(c). To defeat a motion for summary judgment, the non-moving party must set forth specific facts sufficient to show that a reasonable factfinder could return a verdict in his favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Because Sanders's case was decided in the district court under 28 U.S.C. § 2254, this court must review the district court's decision in light of the standard of review for habeas corpus actions set forth in § 2254(d). Section 2254(d) provides that an application for a writ of habeas corpus "shall not be granted with respect to any claim that was adjudicated on the merits in State court proceedings unless the adjudication of the claim -

(1) resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States; or

(2)...