Shotwell Manufacturing Company v. United States, 16

Citation371 U.S. 341,9 L.Ed.2d 357,83 S.Ct. 448
Decision Date14 January 1963
Docket NumberNo. 16,16
PartiesSHOTWELL MANUFACTURING COMPANY, et al., Petitioners, v. UNITED STATES
CourtUnited States Supreme Court

See 372 U.S. 950, 83 S.Ct. 931.

[Syllabus from pages 341-343 intentionally omitted] George B. Christensen and William T. Kirby, Chicago, Ill., for petitioners.

Joseph M. Howard and Louis F. Oberdorfer, Washington, D.C., for respondent.

Mr. Justice HARLAN delivered the opinion of the Court.

This case is here for the second time in consequence of the remand that was ordered at the 1957 Term. United States v. Shotwell Mfg. Co., 355 U.S. 233, 78 S.Ct. 245, 2 L.Ed.2d 234.

In 1953 petitioners were convicted after a jury trial in the United States District Court for the Northern District of Illinois of willful attempted evasion of federal income taxes of the Shotwell Manufacturing Company for the years 1945 and 1946. Int.Rev.Code of 1939, § 145(b), 53 Stat. 63, 26 U.S.C.A. § 145(b). The individual petitioners, Cain and Sullivan, were officers of Shotwell, a candy manufacturer. The charge was that the company's tax returns for these years had not reported substantial income, received from one Lubben, on sales of candy above OPA (Office of Price Administration) ceiling prices—so-called black-market sales.

On appeal the convictions were reversed and a new trial ordered by a divided Court of Appeals on the ground that the District Court should have ordered suppressed certain evidence, used at the trial, which petitioners had furnished the Government in reliance on the Treasury's then 'voluntary disclosure policy.' 225 F.2d 394. In substance that policy amounted to a representation by the Treasury that delinquent taxpayers could escape possible criminal prosecution by disclosing their derelictions to the taxing authorities before any investigation of them had commenced. See 355 U.S., at 235, note 2, 78 S.Ct., at 248; pp. 348—352, infra.

The evidence held subject to suppression consisted of tabulations purporting to show the amount of unreported black-market income received by Shotwell from Lubben during the two tax years in question, and offsetting black-market payments by Shotwell for the purchase of raw materials which almost matched the black-market receipts. Concluding that petitioners' disclosure had been a genuine one (contrary to the District Court's finding) and that it had been made before any investigation of Shotwell's tax returns had started and was thus timely (a question not reached by the District Court, 355 U.S., at 236, 78 S.Ct., at 248;), the Court of Appeals held that the disclosure was valid and that the Government could not, consistently with the Fifth Amendment, use the disclosed material at petitioners' trial.

The matter then came here for review on the Government's petition for certiorari, during the pendency of which the then Solicitor General moved to remand the case to the District Court for further proceedings on the suppression issue—an issue which both sides recognized had properly been one for the court and not for the jury. 355 U.S., at 244, 78 S.Ct., at 252; see United States v. Lustig, 2 Cir., 163 F.2d 85, 88—89, cert. denied, 332 U.S. 775, 68 S.Ct. 88, 92 L.Ed. 360. The motion was based on the claim that newly discovered evidence in possession of the Government would show that the Court of Appeals' decision as to the bona fides and timeliness of the alleged disclosure was the product of a tainted record, involving an attempt on the part of these petitioners 'to perpetrate a fraud upon the courts.' 355 U.S., at 241, 78 S.Ct., at 250. Without reaching any of the questions decided by the Court of Appeals we vacated the judgment of that court and remanded the case to the District Court with instructions to reexamine the disclosure episode in light of the parties' additional evidence and that already in the record, to decide anew the suppression issue, and depending upon its decision to enter a new judgment of conviction or an order for a new trial, as the case might be. 355 U.S., at 245—246, 78 S.Ct., at 253.

The District Court, after a full evidentiary hearing, again denied suppression, finding that 'no honest, bona fide voluntary disclosure' had ever been made and that fraud had 'permeated' the petitioners' disclosure showing at both suppression hearings and at the trial.1 These ultimate findings rested primarily on subsidiary findings that although Shotwell's black-market receipts had not in themselves been misrepresented, the claim that they had been almost entirely offset by payments for the purported purchase of black-market supplies was false—the truth being (contrary to what petitioners Cain and Sullivan had testified in the earlier proceedings) that most of Shotwell's black-market receipts, 'totaling between three and four hundred thousand dollars,' had found their way into the pockets of Cain, Sullivan and Huebner, all Shotwell officers. The District Court also denied motions for a new trial and overruled challenges, made for the first time in July 1957, to the original grand and petit jury arrays.

The Court of Appeals, sustaining these findings and rulings2 and overruling other challenges to the remand and original trial proceedings, has now affirmed these convictions, 287 F.2d 667. The case is again before us on certiorari. 368 U.S. 946, 82 S.Ct. 386, 7 L.Ed.2d 342. We affirm the judgment below.

I.

The principal contention is that notwithstanding the finding that Shotwell's disclosure of black-market receipts was fraudulently contrived, the Self-Incrimination Clause of the Fifth Amendment barred the Government's trial use of any of the disclosed material.3

Preliminarily we reject as specious petitioners' suggestion that the District Court's finding of fraud is infirm because the falsity of Shotwell's black-market payments, on which that finding principally rested, was an immaterial consideration in view of the Commissioner's then ruling that black-market payments were not includible in the cost of goods sold—in other words, that Shotwell's tax liability would have remained the same whether or not such expenditures were truthfully represented.4 The fact is that at the time the disclosure was made the Commissioner's ruling was even then in litigation, and some six months thereafter was rejected by the Tax Court, Sullenger v. Commissioner, 11 T.C. 1076, as it also was later by several of the Courts of Appeals. See Commissioner of Internal Revenue v. Weisman, 197 F.2d 221 (C.A.1st Cir.); Commissioner of Internal Revenue v. Guminski, 198 F.2d 265 (C.A.5th Cir.); Commissioner of Internal Revenue v. Gentry, 198 F.2d 267 (C.A.5th Cir.); Jones v. Herber, 198 F.2d 544 (C.A.10th Cir.).

Indeed, the record here shows that petitioners, despite the administrative ruling, attempted to negotiate a settlement reflecting a substantial allowance of such expendi- tures, and that in making their disclosure they reserved the right to contest the ruling by way of a suit for refund, in whole or in part, of the additional taxes to be assessed in respect of the unreported black-market income. Beyond this, had petitioners been able to convince the Treasury that Shotwell's failure to report the black-market receipts had been due to an honest, though mistaken, belief that such income could be offset by black-market expenditures, it might well have borne importantly on their liability for civil fraud penalties. Int.Rev.Code, 1939, § 293(b).5 In short, in making their suppression contention petitioners cannot escape the consequences of the finding that their disclosure was fraudulent.

It is of course a constitutional principle of long standing that the prosecution 'must establish guilt by evidence independently and freely secured and may not by coercion prove its charge against an accused out of his own mouth.' Rogers v. Richmond, 365 U.S. 534, 541, 81 S.Ct. 735, 739, 5 L.Ed.2d 760. We have no hesitation in saying that this principle also reaches evidence of guilt induced from a person under a governmental promise of immunity, and where that is the case such evidence must be excluded under the Self-Incrimination Clause of the Fifth Amendment. See Bram v. United States, 168 U.S. 532, 542—543, 18 S.Ct. 183, 187, 42 L.Ed. 568; Hardy v. United States, 186 U.S. 224, 229, 22 S.Ct. 889, 891, 46 L.Ed. 1137; Ziang Sung Wan v. United States, 266 U.S. 1, 14, 45 S.Ct. 1, 3, 69 L.Ed. 131; Smith v. United States, 348 U.S. 147, 150, 75 S.Ct. 194, 196, 99 L.Ed. 192. The controlling test is that approved in Bram: "a confession, in order to be admissible, must be free and voluntary: that is, * * * not * * * obtained by any direct or implied promises, however slight * * *." Bram v. United States, supra, 168 U.S. at 542—543, 18 S.Ct. at 187. Evidence so procured can no more be re- garded as the product of a free act of the accused than that obtained by official physical or psychological coercion. But in this instance we find nothing in the circumstances under which the challenged evidence was procured that would run afoul of these jealously guarded constitutional principles.

A coerced confession claim, whether founded on a promise of immunity or otherwise, always involves this question: did the governmental conduct complained of 'bring about' a confession 'not freely self-determined'? Rogers v. Richmond, supra, 365 U.S. at 544, 81 S.Ct. at 741. Under any tenable view of the present situation we think it clearly did not.

The inapplicability here of the constitutional principles relied on by petitioners inheres in both the essential character of this offer of immunity and the particular response of these petitioners to that offer. The offer was nothing more than part of a broad administrative policy designed to accomplish the expeditious and economical collection of revenue by enlisting taxpayer cooperation in clearing up as yet undetected underpayments of taxes, thereby avoiding the delays and expense of...

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